Canadian dollar drops to 77 cents after central bank cuts interest rate

The Canadian dollar took another surprise dive on July 15 after Canada’s central bank lowered its benchmark interest rate to 0.5 percent.

The Canadian dollar was worth 77.1 cents at market close on Thursday, July 16, down from 78.6 cents at close on Tuesday, July 14.

It was the second time this year the Bank of Canada dropped the rate after keeping it at 1 percent for nearly four years. The cut is an attempt to boost the country’s economy by making corporate and consumer borrowing easier.

The cuts are a response to new estimates by the bank that show the country’s economy contracted in the first half of 2015, according to a Bank of Canada news release.

The Bank of Canada last cut its benchmark interest rate in January 2015 when it went from 1 percent to 0.75 percent. The cut resulted in the Canadian dollar falling to 81 cents, down from an average of about 86 cents in December 2014.

 

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