Canadian dollar has biggest weekly drop in decades

Fri Oct 3, 2008 4:46pm EDT
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* Canada's dollar ends week 4.5 pct lower versus greenback

* U.S. House passes $700 bln financial bailout package

* Bonds rise on concerns of global recession

By John McCrank

TORONTO, Oct 3 (Reuters) - The Canadian dollar suffered its biggest weekly decline in at least 38 years against the U.S. dollar this week as the passage by Congress of the $700 billion U.S. rescue package on Friday failed to persuade investors that the worst of the financial crisis was behind them.

Bond prices rose and yields fell as fears of a global recession had many in the market betting that central banks would soon be cutting interest rates to spur growth.

The Canadian dollar closed at C$1.0815 to the U.S. dollar, or 92.46 cents, down from C$1.0799 to the U.S. dollar, or 92.60 U.S. cents, at Thursday's close.

The currency ended the week down 4.5 percent against the greenback, its biggest one-week drop since at least 1970, according to Thomson Reuters data. Early in the session it touched a 13-month low, but regained some ground after the passage of the rescue package for the besieged U.S. financial sector. See [ID:nSP58422]

The U.S. House of Representatives passed a revised version of the bailout plan after its surprise rejection of the first version of the plan earlier this week, which sent markets into panic mode.   Continued...