The Canadian dollar has fallen to a 22-year-low, its weakest since 2003, according to a Bloomberg report. It further noted that the US dollar has surged, and euro and Mexican peso have also taken hits after United States President Donald Trump made good on his threat to impose tariffs on Canada, China and Mexico.
“The dollar surged, oil jumped and equity markets turned red,” as per the Bloomberg report.
“The market needs to structurally and significantly reprice the trade war risk premium. For Canada and Mexico, we see this trade shock — if sustained — as being far larger in economic magnitude than that of Brexit on the UK,” wrote George Saravelos, head of FX research at Deutsche Bank, Bloomberg reported.
The report noted that after Trump's tariff announcement, Canadian Prime Minister Justin Trudeau hit the US with a 25 per cent counter-tariff, while Mexican President Claudia Sheinbaum has also promised retaliatory tariffs. Further, the trade war has pushed up oil prices on the US side due to imports from Canada and Mexico in North America's integrated oil market, the report noted.
China's Commerce Ministry also issued a statement threatening “corresponding countermeasures” but did not specify what, and said it would file a complaint to the World Trade Organization (WTO), the report added.
(With inputs from Bloomberg)
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