The Canadian dollar crashed to a 50-year low against U.S. funds in Toronto foreign exchange trading today despite an increase in Canadian interest rates to record levels.
The Canadian dollar fell one-fifth of a cent to close at 80.93 cents in United States currency, its lowest closing level since 80.08 cents in December 1931.
Earlier this week, federal Finance Minister Allan MacEachen hurridly summoned the heads of Canada's six largest banks to Ottowa and asked them to cut back on loans to finance foreign takeovers by Canadian corporations.
MacEachen said the recent takeover binge was hurting the exchange value of the Canadian dollar. He cited the recent purchase and control of Canadian International Paper for $1.1 billion from International Paper Co. of New York as an example.
The bankers agreed that the minister's request was timely, and said they would accept his advice and reduce takeover lending.
In the United States, a strong backlash against foreign takeovers, especially from Canada, has developed.
During the week, the Canadian dollar fell 1.33 cents against U.S. currency. The value of a U.S. dollar in Canadian funds currently is about $1.235 Canadian dollars.