20.03.201405:48:45UTC+00Canadian dollar drops to lowest point since 2009

The Canadian dollar plunged immensely on Wednesday to end below 89 cents US for the first time  since mid-2009, as markets understood the comments by Federal Reserve Chair Janet Yellen that meant the US central bank might increase interest rates sooner than expected.

Speculations on Fed intentions emerged a day following Bank of Canada Governor Stephen Poloz implied the interest rate hikes in Canada might be further away than anticipated. 

The loonie slipped 0.86 of a cent, to 88.93 cents US as the Fed reiterated its plan to maintain short-term rates close to zero but no longer cites a specific unemployment rate that might result eventually to increase rates. But it would monitor a broad range of economic data before approving any rate hike.

Yellen signaled the Fed could start elevating short-term rates in six months following it halts its bond purchases around year's end. The US central bank would also trim further its monthly bond purchases by another $10 billion, to $55 billion.

On Tuesday, the currency slid 0.68 of a cent following Poloz remarked slower than normal growth could be the new norm. He added those conditions would require central banks to maintain interest rates low for longer and that a rate decrease by the Bank of Canada could not be ruled out.