Canadian effective exchange rate index in Canada - Data and Analysis (1980-2032)

The Canadian dollar's effective exchange rate is projected to reach 103.9 in 2026, representing a depreciation of 1.0% from the previous year, which marked the weakest level in nearly two decades. This performance in 2026 reflects a continuation of substantial currency weakness in 2025, which was driven by widening interest rate differentials as the Bank of Canada cut rates more aggressively than the US Federal Reserve, persistent trade policy uncertainty surrounding US tariff threats that undermined confidence in Canadian assets and softening commodity prices that reduced demand for Canada's resource exports. The 2026 index level sits 21.0% below the 2011 historical peak of 131.4 and 17.6% below the 1990 reading of 126.1, illustrating the Canadian dollar's long-term trend toward depreciation against major trading partners.The past five years witnessed significant volatility in the Canadian dollar driven by pandemic disruptions, commodity price swings and divergent monetary policy trajectories. Pandemic-era financial-market disruption initially generated sharp currency swings, while the subsequent commodity-price upswing briefly supported the Canadian dollar as energy and other resource prices rose. That support faded as global growth slowed and commodity markets lost momentum. Meanwhile, inflation's retreat prompted the Bank of Canada to shift toward monetary easing, widening the yield advantage available in the United States and directing capital toward U.S.-dollar assets. Trade developments have become a more prominent drag during the latter part of the period. The prospect of new U.S. tariffs and a less predictable bilateral trade environment has raised the perceived risk attached to Canadian export-oriented industries, particularly resource producers and manufacturers integrated into North American supply chains. These pressures have pushed the CERI lower despite periods of U.S.-dollar weakness against other major currencies.