Article content continued

Macquarie was among the first major forecasters to predict the currency would hit these levels. A 59 U.S. cent Canadian dollar would mean one U.S. dollar buys C$1.6949.

The currency fell as much as 0.6 per cent to 69.90 U.S. cents Tuesday in Toronto,, the first time it touched that level since May 2003, as crude oil fell to a 12-year low of US$29.93 per barrel in New York. The first time the Canadian dollar weakened below 70 U.S. cents was 1997, before the country’s oil industry took off and when its government was wrestling with a budget deficit.

It mostly traded below 70 U.S. cents between 1997 and 2003, a period when manufacturing made up a larger part of exports than oil. It’s all-time low was 61.76 U.S. cents in 2002.

Canada’s newly elected Liberal government has pledged to run deficits to help stimulate an economy hindered by the collapse in prices for crude, until last year the country’s biggest export, and consumer spending held back by near-record debt levels.

Even though Doyle predicted Canada’s central bank will cut its benchmark rate to a record low 0.25 per cent on Jan. 20, a weakened manufacturing sector and more competition from Mexico in the U.S. market, Canada’s largest trading partner, mean it will take longer for the country to see an economic benefit with oil prices still depressed.

Once the loonie reaches its record low, it will stay depressed through the end of 2018, Doyle said.

“Manufacturing and non-energy exports have far less ability to propel the economic outlook than they have in the past,” Doyle said. “Many of our oil and oil-related sectors have grown, and a lot of our manufacturing sectors have not grown and remained low.”

Bloomberg News