06/27/2016 02:35 EDT | Updated 06/29/2016 03:59 EDT

Brexit Is ‘Kryptonite For The Canadian Dollar,' But Helpful For Indebted Consumers

But it could be good news for mortgage borrowers.

Currency forecasters expect the oil-hammered Canadian dollar to stay low for longer because of Brexit.

The loonie lost roughly a cent U.S. on Friday as markets reacted to the news that British voters had chosen to leave the European Union, and the loonie’s slide continued on Monday, falling another half-cent U.S. to trade at around 76.3 cents U.S.

The Canadian dollar fell sharply after Brexit, and continued sliding Monday. (Chart:

Low oil prices and Brexit-related jitters over the future of the global economy are “kryptonite for the Canadian dollar,” Scotiabank chief foreign exchange strategist Shaun Osborne said, as quoted in a Globe and Mail briefing.

In a client note published Monday, Osborne noted that the loonie has a “vulnerability to weakness in periods of risk aversion,” meaning it tends to fall when investors are nervous.

Wext Texas Intermediate oil prices had another bad day on Monday in the wake of Brexit. (Chart: Bloomberg)

The Canadian dollar tracks commodity prices, particularly oil, and commodity prices have been doing badly since Brexit. The North American benchmark oil price fell by some $3 per barrel Friday after Brexit, and was down by another half a dollar on Monday, trading around US$45.95 per barrel.

But if Brexit is "kryponite" for the loonie, it's an out-and-out kiss of death for the British pound, which plumbed depths on Monday it had not seen in 31 years, and was trading below US$1.32. Most currencies have fallen against the U.S. dollar in recent days, as investors consider it a safe haven.

The British pound fell to its lowest level in 31 years against the U.S. dollar on Monday, as the aftershocks of Brexit continued to reverberate. (Chart:

Good news for interest rates

But one effect of a lower loonie is that the Bank of Canada will feel less pressure to raise interest rates, and that could be good news for Canada’s heavily indebted consumers.

In a report issued Friday after Brexit, TD Bank economists suggested a U.S. interest rate hike could be delayed by the new economic uncertainty, and the same could be true in Canada if commodity prices continue to suffer post-Brexit.

“In response to the financial market turmoil, we believe the U.S. Federal Reserve would delay any interest rate increases until financial conditions eased substantially. This dramatically lowers the probability of a hike this year,” they wrote.

The Bank of Canada’s next interest rate announcement is July 13, but it’s not expected to move on rates this round.

Like HuffPost Canada Business On Facebook

Also on HuffPost

Photo gallery Canadian Dollar Through History See Gallery