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    Asian Currencies Plunge Against CAD After Bank of Canada’s Surprise Rate Hike

    Updated: May 28, 2018  

    To the surprise of many, the Bank of Canada raised interest rates on Wednesday to 1.0%, from 0.75%, which sent currencies in the Asia-Pacific region tumbling against the Canadian dollar.

    The Bank of Canada had been expected to raise the cost of borrowing again this year, following a quarter-point hike in July, but most analysts had been predicting a move in October.

    The bank said that a 1.0% interest rate was justified in light of last Thursday’s GDP data, which showed Canada’s economy growing at its fastest pace in nearly six years (4.5%).

    Like most central banks, following the 2008 financial crisis the Bank of Canada were forced to adopt an especially easy, or stimulative, monetary policy. Beginning in late 2007, the bank slashed interest rates, from 4.5% to just 0.25% in April 2009. Since then, rates in Canada have averaged less than 1%. Following the release of GDP, analysts at Scotiabank predicted that Canadian interest rates would rise to 1.75% by the end of 2018.

    Against the Canadian dollar, the Japanese yen fell on Wednesday by 2% to a 21-month low following the Bank of Canada’s announcement, with ¥100 now buying just C$1.114. Readers should be aware that the CAD/JPY equivalent rate (89.75) is fast approaching major resistance at 90.0.

    Likewise, the Hong Kong dollar fell against the ‘loonie’ by 1.9% to a 27-month low of C$0.155.

    The South Korean won fell by 1.7% to a 32-month low, and ₩1000 now buys C$1.076. The CAD/KRW equivalent rate (929.33) finally managed to break through major resistance at 920 – a level which had kept it contained since May 2015.

    One hundred Philippine pesos now fetches only C$2.39 – the peso’s lowest buying power since January 2014.

    The Australian dollar fell by as much as 2.2% against its Canadian cousin at one point on Wednesday before recovering and ending the New York session with a loss of roughly half that amount. The Aussie is given credit for its display of resilience but it nonetheless posted an 8-month low on the day of C$0.9675. It ended the New York session at C$0.9778.

    It’s been one-way traffic in NZD/CAD since the exchange rate broke C$0.92 in August. Wednesday’s decision by the Bank of Canada is merely the latest excuse for the rate to hurl itself downwards. NZD/CAD fell by 2.2% on Wednesday to $0.8752 – a 15-month low. The rate has fallen 10.3% since June.

    Whether you’re in need of foreign currency for travelling, making international payments or sending money to loved ones overseas, you can change money at better exchange rates than those on offer at the local bank or airport money changer by using BER’s online comparison calculators for travel cash and foreign currency transfers.

     
    Posted under: #News #AUD #CAD #HKD #JPY #KRW #NZD #PHP #USD

    Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.