The Canadian dollar hit its lowest level in two years this week, adding further pressure on Canadians already worried about inflation and a possible global recession.
The Canadian dollar fell from 75.27 to 75.15 US cents on Saturday, according to CTV National News.
“Buying things is going to get more expensive and your dollar isn’t going to get that far,” said Lydia Miljan, a professor of political science at the University of Windsor in Ontario.
The Canadian dollar’s low value could impact already high food prices due to inflation. Conversely, a recession could bring prices down if people choose to spend less.
Additionally, the World Bank had warned on Thursday that countries could face a global recession in 2024 as central banks are forced to raise interest rates to offset inflation. This phenomenon could cause lasting damage to emerging and developing countries.
Importers will feel the impact of the Canadian dollar’s decline more than exporters, who can sell their products in US currency, Ms Miljan said.
What is different today is the risk of recession combined with high inflation, she added. According to the professor, any financial advisor would advise holding off on making a major purchase and paying off debt as interest rates rise.
The Bank of Canada raised interest rates to 3.25% this month. It’s not the first time this year that she’s done it.
The war in Ukraine is also continuing to affect the global economy.
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