One portfolio manager says that the loonie could fall to 50 cents U.S. over the longer term if Canada doesn’t fix its issues around inflation and affordability.
Jean-Francois Tardif, founder and portfolio manager at Timelo Investment Management, said in an interview with BNN Bloomberg that a drastic decrease in the value of Canada’s currency “won't happen overnight,” but could be a “slow erosion” if certain trends aren’t reversed.
If not, he added the loonie could “easily” fall to 50 U.S. cents.
“We have here in Canada a housing affordability (issue),” Tardif said.
“And we have wage pressure because people can't afford houses. The price of everything is up... so people are going to ask for higher wages which creates higher inflation. Higher inflation means that the economy is not doing as well.”
He also highlighted that economic weakness will mean less interest from foreign investors, which could also weigh on Canada’s currency.
The loonie finished trading at 74 cents U.S. on Tuesday.
Click the video at the top of this article to watch the full interview with Jean-Francois Tardif.