The Falling Canadian Dollar: How Will It Affect M&A Activity In Canada?

The Canadian dollar has taken a tumble in 2015 – dropping from approximately eighty-five cents to flirting around and even below eighty cents as compared to the American dollar. Analysts are blaming not only sinking oil prices, but also the Bank of Canada's dovish monetary policy. On January 21^st, the Bank of Canada cut its rate on overnight loans between commercial banks by one-quarter of a percentage point to 0.75%. The cut was unexpected as the rate had been at 1% since September 2010, and was last cut in April 2009. The Bank of Canada said its decision was in response to the "recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada."

Unfortunately, many forecasts predict that the Canadian dollar will stay depressed for at least the next two years, with projections ranging from the loonie falling to anywhere from seventy-five to seventy-seven cents by the end of this year, to ranging from seventy-one to eighty-one cents