TORONTO — Canada's dollar dipped below 70 cents U.S. on Tuesday for the first time in nearly 13 years.
The currency's value fluctuates on a minute-by-minute basis but fell to as low as 69.89 cents U.S. before noon ET.
It was the first time the loonie was below 70 cents U.S. since the spring of 2003, according to Bank of Canada data. The last time the dollar settled below that threshold was on April 30, 2003, when it closed at 69.76 cents U.S.
Patrick Leblond, an expert in finance at the University of Ottawa, said market traders are more concerned with the fundamental challenges facing the loonie than its plunge below an arbitrary price point.
"I'd like to believe they're a little smarter than that," he said.
The currency has been sinking for some time as a result of lower oil prices and other factors and fell below 71 cents U.S. for the first time in more than a decade last Wednesday.
Uncertain prospects for global growth are tamping down demand for Canada's natural resources, Leblond said.
Combined with recent volatility in stock markets across the world, he said, that global uncertainty is also causing people to flee for the safe haven of U.S. Treasury bonds, which pushes the value of the greenback higher against all other currencies, including Canada's.
"The U.S. dollar becomes a refuge, and that's what we've seen in the last few days," he said.
The loonie is heavily influenced by the global price for oil, one of the country's major exports.
Crude oil futures were trading just above US$30 a barrel, another multi-year low, as the loonie sank Tuesday morning.
The currency's historic low is 61.79 cents U.S. — set in January 2002 — but it hit an all-time high of 110.3 cents U.S. in November 2007 as Canada's resource-heavy economy benefited from global demand for its exports.
The last time Canada's dollar was worth more than the greenback was about three years ago, in February 2013.
COSTS OF FRESH FRUITS AND VEGETABLES EXPECTED TO RISE
The sliding loonie could make it harder for some Canadians to eat their Florida oranges or California heads of lettuce this year.
The dropping dollar, which dipped below the 70-cent U.S. mark on Tuesday, is expected to continue to leave shoppers with bigger grocery bills, especially when it comes to buying fresh fruit and vegetables.
Nearly all fruit and vegetables consumed in Canada are imported, making them more susceptible to the loonie's fluctuations.
"It really boils down to the dollar," said Kevin Grier, an agriculture and food market analyst.
Last year, fruits and veggies jumped in price between 9.1 and 10.1 per cent, according to an annual report by the Food Institute at the University of Guelph. The study predicts these foods will continue to increase above inflation this year, by up to 4.5 per cent for some items.
Sylvain Charlebois, the report's lead author, said for every U.S. cent the dollar drops, foods that are imported likely increase one per cent or more.
These prices have been on the rise for years.
In November 2011, one kilogram of apples cost an average of $3.35 in Canada, according to Statistics Canada. Four years later, the same amount cost $4.12.
One kilogram of celery, meanwhile, increased from $2.23 to $3.08 over the same time frame.
While the increased costs have dealt a blow to everyone's wallet, they have a more pronounced effect on Canadians living on a tight budget or in remote regions, where fresh fruit and vegetables are more expensive than in more urban areas.
People living in northern and remote communities are most likely to be hurt by these rising costs, said Diana Bronson, the executive director of Food Secure Canada.
In Nunavut, for example, residents typically pay about two times more than the Canadian average for staples, according to the Nunavut Bureau of Statistics.
There, a kilogram of carrots cost $6.17 in March 2015, while the Canadian average was about $4 less.
Lower- and middle-class people — many "who can't find a job that will pay them enough to ensure that they can afford a healthy diet for their families" — also feel the pinch of rising food prices, said Bronson.
"It's students. It's senior citizens. It's the working poor. It's new immigrants," she said, adding that aboriginals and visible minorities are disproportionately impacted.
When fruits and vegetables rise in price, it makes it more difficult for these groups to buy enough to get their daily fruit and vegetable intake.
"The wrong kind of food is cheap, and the right kind of food is still expensive," said Bronson. She hopes the new Liberal government's promised national food policy will address this imbalance.
A LOOK AT THE WINNERS AND LOSERS ACROSS CANADA AS THE LOONIE CONTINUES NOSEDIVE
The loonie fell below the 70-cent U.S. mark Tuesday for the first time in 13 years. In its wake, the rapidly dropping dollar is leaving a roster of winners and losers in Canada. Here's a look at who is benefiting — and who is hurting:
Winner: The film industry. Hollywood North, whether it be Vancouver, Toronto, or some of the up-and-coming markets like Calgary, is booming. Peter Leitch, president of North Shore Studios and chairman of the Motion Picture Production Industry Association of B.C., says American studios are increasingly heading to Canada to take advantage of the low dollar.
"That does make Canada one of the top choices of places to come to," said Leitch. "A few years ago when it was at par, it was quite a challenge to attract business."
He said the boost to the film industry is helping fill some of the gaps from the resource sector.
"It's a great alternative when other parts of the economy are struggling. I mean, we're hiring people from the oil and gas industry to help rig some of our sets."
Loser: Snowbirds. Canadians planning their winter escape to the southern U.S. will be feeling the pinch as their money won't stretch as far. Travellers are likely to cut back their trips and spend less while enjoying the warmer climes.
Winner: The cattle industry. Canada exported about $1.5 billion in beef products to the U.S. last year. Brian Perillat, senior analyst at cattle market research outfit Canfax, says the high U.S. dollar has helped keep Canadian beef prices up even as the U.S. market has started to retreat.
"As the (Canadian) dollar goes down, it certainly helps our prices relative to the U.S.," said Perillat.
"Basically every time the loonie drops a cent, on average our calf prices go up about five cents a pound, holding all other things consistent."
Loser: Pro sports teams. If you think buying a pair of shoes in the U.S. hurts, try signing a multimillion-dollar contract with an NHL, NBA or Major League Baseball star.
Winner: Tourism. Canada's tourist hotspots are getting a boost from Americans heading north of the border as well as Canadians opting to take so-called staycations.
"We've got a lot of drive traffic coming across the border," said Sarah Morden, a spokeswoman for B.C. ski resort Whistler Blackcomb. "It's just kind of a no-brainer really. We're not that far from Washington state and we've got great snow and a low Canadian dollar."
The Conference Board of Canada says overnight travel from the U.S. increased about seven per cent last year and is expected to rise another 3.3 per cent this year.
Loser: Consumers. Be prepared to pay more for anything imported, including food. The University of Guelph's Food Institute estimates the average Canadian household spent an additional $325 on food in 2015 and is expected see an additional increase of about $345 this year because of the low dollar.
Winner: The mining sector. Vancouver mining company Teck Resources credits the low Canadian dollar for helping the company weather the downturn in commodity prices, with the company able to sell its copper and coal at U.S. prices while pay operating costs in Canadian.
