CANADA FX DEBT-C$ slides as greenback rallies

Tue Jan 20, 2009 4:53pm EST
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* C$ jumps after rate cut, but down from Monday

* BoC cuts rates 50 bps to 1.0 percent, as expected

* Government bonds lower, pace U.S. market

By Jennifer Kwan

TORONTO, Jan 20 (Reuters) - The Canadian dollar fell versus the U.S. dollar on Tuesday as the greenback rallied against a range of currencies as investors sought safety amid growing worries over the global economy.

The Canadian currency finished at C$1.2676 to the U.S. dollar, or 78.89 U.S. cents, down from C$1.2547 to the U.S. dollar, or 79.70 U.S. cents, on Monday.

"We're seeing flight to safety to the U.S. dollar and that's driving all currencies down against the greenback, including our own," said Sal Guatieri, senior economist at BMO Capital Markets.

Economic concerns may be leading investors to think things will get worse before they get better, said Guatieri, noting: "Clearly, that's on full display today with equity markets taking another beating."

North American stock markets sold off sharply on Tuesday as growing troubles in the international banking sector underscored the economic crisis. Toronto's main stock index .GSPTSE ended down 3.81 percent, while the S&P 500 index .SPX was off 5.28 percent.   Continued...