Commodity-Linked Currencies Slide to Records Amid Crude-Oil Rout

  • Canada's dollar at 11-year low, Colombia peso drops to record
  • Unshackled OPEC output bodes ill for oil-producer currencies

A tough year just got a whole lot worse for the currencies of commodity exporters.

The Canadian dollar dropped to its lowest in 11 years, Colombia’s peso plunged to a record and South Africa’s rand slid to an all-time low as crude oil and iron ore prices sank to the lowest since 2009. A Bloomberg gauge of commodity prices fell to the lowest in 16 years.

“More bad times are ahead” for the currencies of commodity-producing nations, said Greg Anderson, global head of foreign-exchange strategy in New York at Bank of Montreal. “Oil’s getting hammered the most, although it’s not the only commodity getting hammered.”

OPEC Outlook

The currency outlook for oil exporters was clouded by the Organization of Petroleum Exporting Countries’ updated free-for-all production stance, which may lift the lid on millions of barrels of additional crude supply next year. The oversupply, which is echoed in metals markets, weighed on exchange rates for nations that sell raw materials.

The Canadian dollar fell 1 percent to C$1.3499 against its U.S. counterpart at 5 p.m. in New York, after touching the lowest since June 2004. BMO’s Anderson said it may fall as low as C$1.38 before it begins to strengthen.

Colombia’s peso plunged as much as 3.7 percent to a record. The Norwegian krone, Mexican peso and New Zealand dollar all declined more than 1 percent against the greenback.

Benchmark Brent crude futures slid as much as 5.6 percent to $40.60 a barrel, the lowest since February 2009. The Bloomberg Commodity Index, a basket of prices for natural resources from copper to oil and gold, dropped as much as 2.7 percent to the lowest since 1999.

“Commodity prices are under significant pressure,” said Mazen Issa, senior foreign-exchange strategist at Toronto Dominion Bank in New York. With traders expecting the Federal Reserve to raise interest rates at its meeting next week, it “still looks attractive” to buy the U.S. dollar against the currencies of resource-exporting countries, he said.

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