CANADA FX DEBT - C-dollar skids to weakest since 2004

Thu Oct 23, 2008 9:54am EDT
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* Canadian dollar now down 21.7 percent in 2008

* Market awaits clues of possible Bank of Canada rate cut

By Frank Pingue

TORONTO, Oct 23 (Reuters) - The Canadian dollar skidded to a 4-year lower versus the U.S. dollar on Thursday as investors liquidated riskier assets in favor of the greenback, leaving the domestic currency pinned below 80 U.S. cents.

Domestic bond prices were mostly higher across the curve, relishing in their role as a safe-haven investment as fears of a global recession persist.

At 9:35 a.m. (1335 GMT), the Canadian unit was at C$1.2670 to the U.S. dollar, or 78.93 U.S. cents, down from C$1.2547 to the U.S. dollar, or 79.70 U.S. cents, at Wednesday's close.

Earlier, the Canadian currency fell to C$1.2740 to the U.S. dollar, or 78.49 U.S. cents, which was its weakest since October 2004, but the move was blamed on investors being forced to liquidate assets rather than the usual fundamentals.

"Were just seeing seeing a wave of liquidations by funds and that means they are basically selling anything they can sell, anything that isn't bolted down, and that includes relatively solid currencies like the Canadian dollar," said Doug Porter, deputy chief economist at BMO Capital Markets.

"Personally I think it's way overdone and we are going to see at some point, it may take awhile, but we are going to see a snap-back. But I don't think anybody wants to stand in the way of this move."   Continued...