The Canadian dollar has taken a hit after the United Kingdom decided to withdraw from the European Union on Friday, catching most people, which includes everyone in the global financial market, by storm.
As reports were coming in since Friday morning’s announcement of the Brexit vote, the Canadian dollar’s value slumped below American currency throughout the day, and market insiders got a chance to watch it on the last day before the weekend.
Generally, those people who never anticipated that so many others would out-vote them by an overwhelming majority, to essentially secede from the (European) Union, were caught off guard worldwide.
All nations connected to Britain also includes Canada, as its history is also with Britain and has remained a training partner with the United Kingdom through the European Union.
It’s a heavily debated issue as to what Britain’s economic future is going to look like over the next several years, as it moves forward on its own.
No one who has lived enough of the ’60s and ’70s, who knew what the United Kingdom was before joining the EU, could still remember the difference.
Even so, memories of that time have long been erased within the complexity of vast changes over 42 years since that it’s impossible to do anything but theorize as to what Britain’s future will look like.
And as to Canada’s history with the U.K, as recent as last year, Canada has exported almost $16 billion dollars worth of products, according to Statistics Canada, which makes Britain its largest trading partner next to China and the United States.
According to Reuters Canada, the Canadian dollar has “weakened,” and the news agency even provided some U.S. dollar comparisons from the start.
“At 8:12 a.m. EDT (1212 GMT), the Canadian dollar CAD=D4 was trading at C$1.2996 to the greenback, or 76.95 U.S. cents, much weaker than Thursday’s close of C$1.2772, or 78.30 U.S. cents.”
While this is the first major slump in only three weeks for the already “risk-sensitive” currency, the report points out that strategists have warned that a pro-Brexit outcome would “spell bad news for commodity-exporting countries” everywhere.
The markets are reeling from the result as they did not anticipate that for the first time in 40-plus years, Britain would have voted itself out, which was such a popular view that speculation was counting on it, and as Inquisitr reports, investors were reportedly running to gold, bonds, and low-value Sterling.
Canadian Prime Minister Justin Trudeau was optimistic about the relationship between Canada and the U.K, who offered a little sunshine to the future for both countries, and while the EU and Britain attempt to stabilize their divorce to take the next step, Finance Minister Bill Morneau also made a statement to the press suggesting the Canadian dollar had no choice but to recover.
“While some market and economic volatility can be expected, the Canadian economy is well placed and our financial institutions are well-funded. Global markets are resilient and orderly, and we will continue to monitor developments in the world economy. We affirm our assessment that the United Kingdom economy and financial sector remain resilient and are confident that the United Kingdom authorities are well-positioned to address the consequences of the referendum outcome.”
It’s been noted that what adds to the sinking of the Canadian dollar would have to do with the country’s losses in crude oil and the fact that interest rates were cut twice over the last few years.
Even though the outlook for the Canadian dollar as well as the value for currencies in other markets is seen as eventually recovering, the backlash against the European Union is already said to be a revolt that comes from something more than just the economy, deepening a cultural divide.