Loonies are pictured. (Jonathan Hayward / THE CANADIAN PRESS)
BMO chief economist Douglas Porter called the loonie “the world’s hardest-working currency” in areport to investors on Tuesday, citing unparalleled gains on the U.S. dollar after a shaky start to the year. Porter credited a rise in oil prices, a tame greenback and a “less-dovish” Bank of Canada with helping the loonie recover from tough times.
The Canadian dollar rose by nearly four per cent, far outstripping a two per cent rise by second-place New Zealand’s dollar. Those gains came despite a “whopping” nine per cent plunge during a “brutal” January for the Canadian dollar, Porter said.
Despite the strong gains, Porter said the loonie will likely struggle to maintain its momentum.
“The issue now, of course, is whether oil can hold its recent gains, or even build further,” Porter said. He also warned the BoC “could re-crank its dovish chatter,” and cautioned that the U.S. economy is likely to spring back in the future. In the meantime, Porter advised investors to “enjoy the view” while the loonie remains strong.
Canada, New Zealand, Singapore, Australia, South Korea and Norway all saw their currencies make up ground on the U.S. dollar in the first three months of the year. The value of the British pound fell by a fraction of a per cent, while the euro dropped nearly two per cent. Switzerland, Sweden, Denmark, Japan, Mexico, South Africa and Brazil also saw their currency values drop, with the Brazilian real taking the hardest hit at an 11 per cent fall.