The Canadian dollar slid after Canada’s central bank left its key interest rate unchanged and on concerns that strong currency may harm the nation’s economic growth. Currently the currency rose a little and moves sideway versus the euro and the US dollar.
The Bank of Canada left its overnight rate at 1 percent, as was expected by Forex market participants. The Bank explained its concerns about the strong currency in the statement:
The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.
Some analysts think that the BoC will raise the interest rates in the third quarter of this year as Canada’s economy recovers with good pace. The central bank increased its growth forecast from 2.4 percent to 2.9 percent and said that the nation’s economy will reach its full strength by the middle of 2012. The economic recovery was aided by the rising exports and business investment.
USD/CAD rose from 0.9565 to 0.9631 on the previous trading session and trade near 0.9628 today as of 2:10 GMT. EUR/CAD advanced from 1.3805 to 1.3939 before trading at 1.3922.
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