On January 23rd, foreign exchange strategists warned that US President Donald Trump’s threat to impose high tariffs on northern neighbor Canada would disrupt the Canadian economy and cause the Canadian dollar to fall to a record low. Strategists from banks such as Bank of Nova Scotia, Barclays, Deutsche Bank, and TD Securities have stated that facing high import taxes, the Canadian dollar may fall close to or below the historic low of 1.6193 set in 2002. The Canadian dollar needs to drop by about 16% against the US dollar to reach this level. Deutsche Bank believes that the Canadian dollar is likely to hit a record low, pointing out that the widening gap between the Bank of Canada and the Federal Reserve’s interest rate policies has intensified concerns about tariffs. Bank of Nova Scotia stated on Tuesday that if Canada retaliates comprehensively against the 25% tariffs imposed by the United States, the Canadian dollar may fall to 1.66 by the second quarter of this year.
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