The Canadian dollar, weighed down by weak oil prices, fell Wednesday to its lowest level against the American currency since August 2003, despite a narrowing of the Canadian trade deficit.
Shortly after 1300 GMT, the "loonie" dropped below 71 cents US for the first time in more than 12 years, trading at 0.70906 to the greenback.
But it made a partial recovery after encouraging trade data showed that the deficit had shrunken to 2.0 billion Canadian dollars from 2.5 billion the month before.
By 17H00 GMT, a Canadian dollar was trading for 0.7100 dollars US and 0.65986 euro.
Being so closely linked to raw materials, which account for some 40 percent of the value of the Toronto bourse, the Canadian dollar has suffered from the risk aversion of foreign exchange traders in the new year.
"The Canadian dollar (CAD) is liable to weaken further in 2016, although a lot of bad news is already factored into the exchange rate," according to analysts at the Scotiabank.
"Low oil prices and sluggish domestic growth will count against the CAD in the coming year," they added, noting that the Canadian dollar fell 16 percent against the greenback in 2015 and more than 30 percent over the past three years.
Today\’s "price action is not surprising given the current volatility in the market, and growth currencies like the loonie could be at risk," warned Bipan Rai, director of foreign exchange and macro strategy at CIBC World Markets.