Commodity Rout Spurs Worst Resource Currency Meltdown in 7 Years

by Kevin BucklandChikako Mogi There’s been no respite in the commodity rout that’s seen prices tumble to a thirteen-year low — and that’s sending the currencies of nations that rely on exporting resources toward their worst year since the financial crisis. Canada’s dollar sank to its weakest since 2004 as plunging oil prices shrank the economy and prompted Prime Minister Stephen Harper to call an early election. The Australian and New Zealand dollars were within one cent of six-year lows on Monday amid signs of a slowdown in China, the world’s biggest consumer of raw materials. All three currencies have fallen more than 10 percent this year, spurring hedge funds to turn the most bearish on them since the start of 2014. “Commodity prices have shown a clear and broad-based falling trend in recent months, and that’s being reflected clearly in the currencies of commodity-exporting nations,” said Greg Gibbs, a strategist at Royal Bank of Scotland Group Plc in Singapore. “The Canadian dollar looks particularly vulnerable with five months of consecutive declines in GDP and an uncertain election called over the weekend.” Canada’s currency slid 0.3 percent to C$1.3126 against the dollar as of 6:35 a.m. in London, and earlier … continue reading

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