«There’s a good chance it might,» said CIBC currency strategist Bipan Rai.

«It’s a combination of a few shocks,» he said, pointing to the impacts of the virus and the decision by OPEC countries to turn on the taps and flood the market with oil.

After one of their worst days on record on Monday, stock markets rebounded a little on Tuesday, but not by nearly enough to undo the damage they’ve seen in recent weeks. The loonie was worth about 70.5 cents compared to the US dollar after falling by more than one per cent on Tuesday.

A month ago, North American oil prices were above $50 US per barrel for West Texas Intermediate (WTI), but those same barrels are now changing hands at around $27 US each, after falling about six per cent on Tuesday. That’s a direct hit on the loonie because of the size and importance of Canada’s oil industry to Canada’s economy and the amount of the commodity that is exported daily.

The plunge in crude prices may not be over, either.

«We’re expecting a fall in the price of WTI to around $23 per barrel and we expect it to stay there until the second half of this year,» said Stephen Brown, Canada economist with Capital Economics. «That will push the loonie down a bit more.»

Brown anticipates the Canadian dollar will fluctuate around 67 or 68 cents until the middle of the year, unless major oil producing countries like Russia and Saudi Arabia decide to restrict the amount of oil supplied to the market.

The amount of uncertainty around the globe has lead to a rush by investors and borrowers to get their hands on American dollars. The amount of available greenbacks internationally has tightened recently, which is increasing its value. That’s yet another reason for the loonie losing value to its neighbour currency south of the border.

«We could certainly see the Canadian dollar soften a little bit more in the short run,» said Shaun Osborne, chief currency strategist at Scotiabank.

«It’s very difficult to predict exactly what is going to happen in these markets because fundamentals don’t typically matter an awful lot. The volatility and other considerations are really driving markets generally and currency markets specifically,» he said.

The loonie actually seems a bit undervalued right now, according to Osborne, but until there is a better sense of the economic damage within Canada and internationally from the coronavirus, it’s difficult to predict.

«The run of events we’ve had recently with emergency rate cuts from the [U.S] Federal Reserve and the Bank of Canada … it is not a particularly kind for forecasters at the moment.»

Good news for farmers

There is one group of Canadians, however, for whom the falling loonie is good news: farmers

That’s because most Canadian farmers sell crops priced in U.S. dollars. Many of those prices have fallen over the last few months because of the coronavirus, so the corresponding drop in the loonie will mitigate that somewhat once their harvests are converting back into Canadian dollars. That’s especially helpful right now because many farmers are still struggling to transport their fall harvest to market because of backlogs with the railways.

«The lower dollar does help offset some of the negatives in the marketplace,» said Tom Steve, general manager with Alberta Barley. «It does make Canadian wheat or canola or any other commodity a little bit more attractive financially for the buyer.»