Canada's Dollar Falls to Year Low Before Bank of Canada Meeting

By Chris Fournier

Sept. 3 (Bloomberg) -- Canada's dollar dropped to the lowest in more than a year before policy makers announce a decision on the nation's borrowing costs.

The Canadian dollar has depreciated versus 12 of the 16 most-actively traded currencies. The Bank of Canada will leave the key interest rate unchanged at 3 percent, according to the median forecast of 28 economists surveyed by Bloomberg News.

``The market is realizing the risk to the Bank of Canada meeting this morning is a one-quarter point ease,'' said Steve Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. ``That's not fully priced in. The softening economic climate has been enhanced with commodity prices finally easing, giving the governor the opportunity to get ahead of the curve this morning.''

The Canadian currency fell 0.8 percent to C$1.0760 per U.S. dollar at 7:56 a.m. in Toronto, from C$1.0672 yesterday, the fifth consecutive daily decline. It earlier weakened to C$1.0777, the lowest since August 2007. One Canadian dollar buys 92.93 U.S. cents.

Canada's currency, dubbed the loonie because of the aquatic bird on the one-dollar coin, will slip to C$1.10 against the U.S. dollar by the end of 2009, according to the median forecast in a Bloomberg News survey of economists.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net