MONTREAL | The canadian dollar will experience a sharp depreciation in the coming months, and the credit ratings of Canada will be lowered, according to a well-known economist.
Quoted by the agency Bloomberg, the economist David Rosenberg anticipating a downgrade for the country, currently one of only two, along with Germany, to have a AAA rating in the G7.
The weight of the debt is approximately 350% of the canadian GDP will lead rating agencies to take this decision, explained the economist.
According to Mr. Rosenberg, who has launched Rosenberg Research & Associates, Inc. in January after having spent more than a decade as the chief economist at Gluskin Sheff & Associates Inc., Canada could get away the better, with a AA rating.
Anticipating a decline in the canadian dollar at 60 cents us, David Rosenberg writes today that his prediction is “conservative”. Friday afternoon, the canadian dollar was worth less than 71 cents us.
The loss of value of the loonie is due to the phenomenal growth of the monetary mass necessary for the Bank of Canada to finance federal spending by buying new bonds, he mentioned.
This situation scares away international investors, as the canadian dollar loses in absolute value, he explained.
Mr. Rosenberg, who had predicted the bursting of the housing bubble in 2005 when he was chief economist for Merrill Lynch for North America, believes that the central bank of Canada has a challenge before it: it must take account of these poor figures in its balance sheet, while trying to reassure foreign investors.