03/19/2019 12:41 EDT | Updated 03/19/2019 13:13 EDT

Canadian Dollar Headed For A Tumble As Economy Weakens, Analysts Predict

All that debt consumers have to pay off will be a drag on the value of the dollar.

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A growing number of analysts are predicting that the Canadian dollar will take a dive this year.

If you've got shopping you were planning to do abroad, now may be a better time than later.

A growing number of analysts are predicting that the Canadian dollar will take a dive this year, pushed downwards by a weaker-than-expected economy, with one expert predicting it will match record lows.

Analysts at TD Securities recently predicted the loonie would trade in the 71-cent to 74-cent U.S. range this year. It was trading at 75.3 cents U.S. as of Tuesday morning.

Earlier on HuffPost: What happens when there's an interest rate hike? Story continues below.

"Prospects for Canadian dollar have shifted considerably to the downside over the medium-term," foreign exchange strategist Mazen Issa wrote, as quoted at CBC.

"This comes in the wake of a poor fourth quarter GDP report, and the Bank of Canada returning to the drawing board on what it got wrong."

The Bank of Canada hiked its key lending rate five times between 2017 and last year, on expectations that a strong economy would soon lead to inflation. But the recent slowdown in the economy has many experts convinced the central bank may have overdone it. Some analysts predict it will soon start lowering rates again.

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"We have long questioned the wisdom of the (interest rate hikes) in the first place and so the risk is that the bite on activity those higher rates are inflicting may prove especially pronounced," said Daragh Maher, the U.S. head of foreign exchange strategy at global banking giant HSBC.

For that reason, "there could be scope for the (Canadian dollar) to weaken further in the weeks to come," Maher wrote, as quoted at currency news site Pound Sterling Live.

A 62-cent loonie?

Perhaps the most dire prediction for the loonie came this week from Fidelity Investments analyst David Wolf, who told Bloomberg News the currency could fall as far as 62 cents U.S., as Canadian households dig themselves out of record-high levels of debt.

A 62-cent loonie would match the currency's all-time low, which it reached in 2002, and it would mean a nearly 18-per-cent decline from its current levels.

Wolf noted the Canadian dollar has already fallen 30 per cent since 2011, when it was above par with the U.S. dollar.

The fact that Canadians are now working to reduce debt levels will work against the economy, pushing down consumption at a time when the global economy is already slowing, Wolf said.

David Tulk, an associate of Wolf's, suggested that even if the Bank of Canada made no more rate hikes, the impact of the five hikes that already happened have yet to work their way through the economy.

"There's still kind of a big bulge in the python, so to speak, in terms of prior increases in interest rates and prior actions."