OTTAWA — High-profile central banker Mark Carney is taking it on the chin these days with blows landing from both sides of the Atlantic.
The former Bank of Canada governor, who made international news last year by jumping ship to head the storied Bank of England, has been undergoing a serious grilling in London over the bank’s tame response to manipulation of foreign exchange rates.
And in Canada, CIBC chief economist Avery Shenfeld has written a note suggesting Carney may have left his successor, Stephen Poloz, with an economy more damaged than it needed to be.
If you look at the fundamental factors driving the Canadian dollar, we think the outlook is all down
The loonie is set to fly south — soon, say TD economists, who are leading the bears with their forecast that Canada’s currency will drop as low as 90 US cents over the next year.
For Teck Resources Ltd. Chief Executive Donald Lindsay, every cent knocked off the value of the Canadian dollar is worth $62 million.
As Chinese economic growth slows, that’s been a rare bit of good news for the world’s second-largest seaborne exporter of coal used in steelmaking, which was forced to take a $30 million writedown on its inventory in the first quarter as the commodity’s price plunged to its lowest level in six years.
Don’t let it hit you on the way down.
The loonie has been hovering close to par with the U.S. dollar for so long that Canadians have almost come to accept that’s just way it is. Which is why the currency’s recent precipitous decline has been garnering so much attention.
The news on the Canadian economy has been almost unrelentingly grim of late. The recent jobs numbers from Statistics Canada were shocking, the trade deficit keeps widening and so on. It’s not surprising then that the loonie is starting to show the strain, tumbling nearly 10% since the start of 2013, one of the biggest annual falls in more than two decades. But, depending on what you do for a living, that could be a good thing.
For the first time Canada’s loonie will join the U.S. greenback, euro and yen as official reserve currencies in International Monetary Fund data. The IMF said the Canadian and Australian dollar will be included in its Composition of Official Foreign Exchange Reserves from the third quarter. They’ve previously been included in an “other currencies” category in the COFER reports.