The value of the Canadian dollar hit its lowest level in two years this week, adding further pressure on Canadians already worried regarding inflation, and a possible global recession.
The Canadian dollar fell from 75.27 to 75.15 US cents earlier Saturday, according to “CTV National News.”
“Buying stuff is going to get more expensive and your dollar won’t go as far,” said Lydia Miljan, a political science professor at the University of Windsor in Ontario.
The low value of the Canadian dollar might have an impact on food prices, which are already high due to inflation. Conversely, a recession might lower prices if people decide to spend less money.
In addition, the World Bank had warned on Thursday that countries might suffer a global recession in 2023, as central banks are forced to raise interest rates to offset inflation. This phenomenon might imply lasting harm in emerging markets and developing economies.
Importers will feel the impact of the drop in the Canadian dollar more significantly than exporters, who will be able to sell their products in American currency, said Ms. Miljan.
What differs today is the risk of a recession combined with high inflation, she added. According to the professor, any financial adviser would advise to wait before making a major purchase and starting to pay off debts, since interest rates are rising.
The Bank of Canada raised its key interest rate this month to 3.25%. It’s not the first time this year that she’s done it.
The war in Ukraine also continues to have an impact on the state of the global economy.