CANADA FX DEBT-C$ falls after Bank of Canada cuts rate

Tue Apr 21, 2009 10:50am EDT
 
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* Bank of Canada cuts rate 25 basis points to 0.25 pct

* C$ dips to 79.96 U.S. cents after rate decision

* Bond prices mostly higher across the curve (Adds details, quote)

By Jennifer Kwan

TORONTO, April 21 (Reuters) - The Canadian dollar weakened against the U.S. dollar on Tuesday morning, touching its lowest level in nearly three weeks, after the Bank of Canada cut its benchmark interest rate to 0.25 percent, but made no explicit promise to take unconventional measures to boost the economy.

The central bank cut its key overnight rate to a historic low of 0.25 percent from 0.50 percent and predicted a deeper recession than it had previously forecast [ID:nN21297335].

It also took the unusual step of providing guidance on rates, saying the overnight rate would stay at 0.25 percent until mid-2010.

"It certainly speaks to the dire situation in the economy," said Charmaine Buskas, senior economics strategist at TD Securities.

"What struck us was the unprecedented level of transparency that the bank used in this statement in its commitment to keep the overnight rate at 0.25 percent until the second quarter of 2010. That really speaks to just how weak economic conditions are and just how much downside there is for the economy.   Continued...