indicatorThe Owl

The loonie during COVID

The Canadian dollar averaged as low as $0.71 in April 2020 and as a high as $0.83 in May 2021

By Rob Roach, ATB Economics 20 September 2021 1 min read

In February 2020—the month before the pandemic was declared—the loonie was worth $0.753 compared to one U.S. dollar.

Falling oil prices and investors seeking safer havens in the form of U.S. treasuries during the early part of the pandemic saw the Canadian dollar average just $0.711 in April 2020.

Since that low point, stronger commodity prices, the global recovery (our dollar tends to rise when the global economy is doing well), a slightly more hawkish stance on the part of the Bank of Canada compared to the U.S. Federal Reserve and other factors pushed the loonie higher vis-à-vis the U.S. greenback.

The Canada-U.S. exchange rate posted its highest monthly average since the pandemic began in May 2021 ($0.825).

There was some depreciation over the summer with the loonie averaging $0.791 over the first half of September.

As with most economic statistics, the big question regarding the exchange rate is “what’s next?”

According to the latest forecast from ATB Capital Markets, the loonie will experience modest appreciation over the coming months, averaging $0.806 during the fourth quarter of 2021 and $0.826 during the first quarter of next year.

Whether this is a “good” thing or a “bad” thing depends on your perspective.

On the one hand, a strong Canadian dollar benefits Canadian importers and consumers purchasing goods from the United States. On the other hand, a weak loonie is a boon to exporters paid in U.S. dollars as they get more Canadian money per U.S. dollar.

Answer to the previous trivia question: Janet Yellen was the first woman appointed as Chair of the U.S. Federal Reserve. She served from 2014 to 2018.

Today’s trivia question: What is U.S. cash made of? (Hint: it’s not paper.)

The loonie averaged $0.791 over the first half of September

The loonie averaged $0.791 over the first half of September


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