By Chris Fournier Dec. 8 (Bloomberg) -- Canada’s currency may drop 2.4 percent versus its U.S. counterpart in the next several days as the nation’s economy falters and a political “kerfuffle” means help may be a long time coming, according to Citigroup Inc. “The economy is entering a more severe phase of correction,” Citigroup analysts Todd Elmer in New York and Michael Hart in London wrote in a note today. “Underlying deterioration elsewhere could prevent a currency rebound. The ongoing political kerfuffle will only add to the Canadian dollar’s vulnerability.” The Canadian currency dropped in November for a sixth straight month, the longest losing streak in 15 years, and has lost 18 percent in the past six months. It traded at C$1.2509 against the U.S. dollar today, extending the gain in the past two sessions to 2.8 percent. The economy lost 70,600 jobs in November, the most since 1982 and almost triple the 25,000 that economists forecast, a government report showed Dec. 5. Canadian Prime Minister Stephen Harper suspended Parliament a day earlier until Jan. 26 to fend off an attempt by a coalition of opposition parties to oust his government. “We wouldn’t be surprised if we saw in the days ahead some trailing off of Canadian dollar appreciation and a return to around C$1.28,” Elmer said in an interview. Citigroup is the second-biggest U.S. bank by assets. “The message that we want to send is that the Canadian dollar is likely to underperform.” Crude Oil’s Drop Crude oil, which accounted for a tenth of Canada’s export revenue last year, plunged 70 percent since reaching a record $147.27 a barrel on July 11, as the global recession reduced demand for commodities. Oil for January delivery rose for the first time in seven days, gaining as much as 8.2 percent to $44.16 a barrel on the New York Mercantile Exchange. Canada’s central bank will cut its target rate by a half- percentage point to 1.75 percent when it meets tomorrow, according to the median forecast of 17 economists in a Bloomberg News survey. Citigroup predicts a cut of that size. “We don’t anticipate that the Bank of Canada decision tomorrow will lend much support to the Canadian dollar,” Elmer said. The central bank cut its overnight rate six times since December 2007 from 4.5 percent. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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