08/04/2011 10:58 EDT | Updated 10/04/2011 05:12 EDT

Canadian Dollar, Japanese Yen Drop In Chaotic Day Of Trading


TORONTO - The Canadian dollar tumbled more than a U.S. cent while the U.S. dollar strengthened following a move by the Bank of Japan to control the rise of the yen.

The loonie fell 1.02 cents to 102.87 cents US, it lowest level since the end of June, as the Bank of Japan intervened in markets by selling the currency and buying the U.S. dollar.

Japanese Finance Minister Yoshihiko Noda said financial authorities decided to intervene in the currency markets because the strong yen could hurt the country’s export-dependent economy.

It could also slow its efforts to recover from the March 11 earthquake and tsunami.

The Japanese move follows action by the Swiss National Bank Wednesday to cut its main interest rate to zero to 0.25 per cent from zero to 0.75 per cent to halt a sharp rise in the franc. The bank warned that the recent appreciation of the currency has dented the economy’s prospects.

The Swiss franc has also been heavily in demand in recent weeks through its status as a safe place for investors to park their cash. Investors have grown increasingly risk-averse amid concerns over government debt crises.

Falling commodity prices also weighted on the Canadian dollar.

Oil prices hovered around $91 a barrel Thursday, down from near US$100 a barrel two weeks ago on demand concerns.

The September crude contract on the New York Mercantile Exchange lost 91 cents to US$91.02 a barrel.

Metal prices also continued to edge lower with the September copper contract down four cents to US$4.29 a pound.

However, investors looking for a save haven while fleeing risky assets such as shaky European government bonds continued to send gold further into record territory. The December contract in New York rose $7.70 to US$1,674 an ounce.

Meanwhile, the Bank of England has left its key rate on hold at 0.5 per cent for the 29th straight month as concerns over Britain’s sluggish economic recovery outweighed inflation concerns.

And the European Central Bank left its key interest rate unchanged at 1.5 per cent.