10/15/2014 12:10 EDT | Updated 12/15/2014 05:59 EST

Canadian dollar hits 5-year low under 88 cents US

The loonie dropped to its lowest level since 2009 on Wednesday, caught up in a sell-off that is dragging down the value of anything associated with crude oil.

At midday, the loonie was off a fifth of a cent and changing hands at 88.33 cents US. It had earlier dropped as low as 87.80, the lowest that Canada's currency has been valued at since July 2009, when the loonie was on an upswing from its previous trough at around 76 cents during the recession. It ended up marching all the way to above $1.10 at that time.

It's been a rough year for the Canadian dollar, as the loonie was above the 94-cent level as recently as July and above par for a good part of 2013. Since then, it has been slowly sliding lower, but a lot of that wasn't because of weakness on Canada's part — it was just losing ground against the U.S. dollar as the American economy was beginning to surge ahead. 

Priced against other currencies, the loonie was doing fine until last month, when oil prices started a steep decline.

As recently as July, the North American oil benchmark (known as West Texas Intermediate or WTI) was trading at $105. Today, that same barrel of oil goes for $81 — a decline of 22 per cent in a quarter of a year.

In terms of currencies, "oil" and "Canada" have become synonymous in recent years, so the loonie is paying the price. "The weakness in oil prices is spilling over in a nasty fashion in Canada," said Mark Chandler at RBC Dominion Securities. 

"The more oil prices fall, the more [the loonie will drop]," Jeremy Stretch at CIBC added.