Our dollar took a record dive today, briefly falling below 83 cents USD, but recovering to close the day at 84.69, losing about 2 and half cents, and more than 10% since last Friday.
It doesn't make much sense to me, but like everything else with our markets, the loonie is reacting to the whirlwind of bad economic news from the United States, pushing oil prices down (oil closed at $78/barrel today), and sending world currencies plummeting against the dollar as investors liquidate their shaky assets all across the globe, in favor of the relative safety of US Treasury bonds.
I say "relative" saftey because I don't have much long term confidence in the US dollar either. $10-13 trillion of debt is nothing to sneeze at. And while central bankers may currently be fretting about the possibility of deflation, currency devaluation is going to start to look awfully tempting once Social Security and Medicare become insolvent just a few years down the road.
Oh well, even if our currency is tanking, at least we're not in as bad shape as Iceland:
Iceland suspended trading on its stock exchange for two days and took control of the country's largest bank — the third to be placed under its protective umbrella — on Thursday as it grappled with a banking crisis that is threatening to engulf the entire country.
The Nordic nation's government also used sweeping new emergency powers to create a new bank that will take over the bulk of the domestic operations of another one of its collapsed banks.
The country is struggling to get a grip on the collapse of its top-heavy banking system, a situation that Prime Minister Geir H. Haarde has warned is putting Iceland at risk of "national bankruptcy."
The crisis is also causing ripples throughout Europe, where tens of thousands of people have accounts with subsidiaries of the Icelandic banks.