The loonie is at a nearly 2-year low. What does that mean for inflation?

A weaker Canadian dollar can worsen inflation on goods imported into the country, though experts say other factors could see the loonie come out on top in global trade.

As Canada’s loonie falters against the surging U.S. dollar, experts say the effect could worsen inflation on some goods imported from south of the border.

The Canadian dollar is sitting at 75 cents compared to the U.S.-dollar benchmark as of Tuesday, a nearly two-year low for the loonie.

Economists say there could be a few reasons for the Canadian dollar’s weakness.

RBC assistant chief economist Nathan Janzen tells Global News that Canadian oil exports have historically been a “big driver” for the dollar’s value and lower prices at the pumps have not helped loonie.

But he and other economists who spoke to Global News point to the relative strength of the U.S. greenback — not the loonie’s weakness — as driving the two currencies apart.

“The U.S. dollar has been going gangbusters against pretty much all currencies,” says Paul Ashworth, chief North American economist with Capital Economics.

In fact, the Canadian dollar has performed relatively well compared to the surging U.S. dollar, owed in part to the tightness of the American and Canadian economies, Ashworth says.

While the Canadian dollar is down about 5.5 per cent year-to-date against the U.S. dollar, the Japanese yen is down nearly 20 per cent, the British pound is down 16 per cent and the euro is down 12.4 per cent so far this year.