June 12 (Bloomberg) -- Canada’s currency plunged to the lowest level in four days as commodities including crude oil, the nation’s biggest export, dropped amid a surge in demand by investors for safer assets. The Canadian dollar fell against all 16 of the most-traded currencies a day after Bank of Canada Governor Mark Carney said its gains this year may threaten economic growth if they persist. He downplayed the prospects for a quick global rebound. “We have commodity prices coming off; there’s the Carney comments,” said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto, a unit of Canada’s second-biggest bank. “We may see a bit more short-term softness.” Canada’s currency, known as the loonie, depreciated as much as 2 percent to C$1.1248, the weakest since June 8, and traded at C$1.1186 per U.S. dollar at 4:16 p.m. in Toronto, from C$1.1024 yesterday. It was little changed for the week. One Canadian dollar buys 89.39 U.S. cents. The loonie has gained 16 percent since reaching a four-year low in March. Finance Minister Jim Flaherty said yesterday in an interview on CTV television he was concerned there may be a “speculative element” to the appreciation. “Today’s rally in dollar-Canada reflects a general pullback in commodity currencies, but also a reaction to yesterday’s expressions of concern with Canadian dollar gains by Carney and Flaherty,” said Daniel Katzive, a currency strategist at Credit Suisse Group in New York. U.S. Dollar Gains The U.S. dollar rose today against all of the major currencies tracked by Bloomberg after Japanese Finance Minister Kaoru Yosano said his nation’s confidence in U.S. debt is “unshakable” and the currency’s global status is safe. Crude fell from the highest level since October after a plunge in European industrial production prompted speculation economic-recovery bets are premature and OPEC said members raised production last month. Crude for July delivery tumbled as much as 2.6 percent to $70.80 a barrel on the New York Mercantile Exchange. The Reuters/Jefferies CRB Index of 19 raw materials dropped 1.5 percent. Raw materials including oil account for more than half of Canada’s export revenue. The pullback in the Canadian dollar is a chance for investors to “reload” bets on the currency, according to a Citigroup Inc. strategy note to clients today from Todd Elmer, a currency strategist in New York. Showing ‘Resilience’ “We think the fundamental backdrop is still very supportive of the Canadian dollar,” Elmer said in a telephone interview. Acceleration in the global economy “looks to be continuing apace, and given that Canada is showing more financial-sector resilience than just about any other country, we think that leaves it well-positioned.” Elmer said he expects the currency to rise to $C1.08 per U.S. dollar. Finance Minister Flaherty told reporters today in Lecce, Italy, before a meeting of Group of Eight officials that Canada has an exit strategy to remove stimulus from its economy as recovery gets under way. The nation will post a record deficit of C$50.2 billion ($45.7 billion) in 2009 as the economy shrinks more than expected and public spending on unemployed workers increases, the government said yesterday. “We shouldn’t overplay at this stage the green shoots, to use the popular term, and we shouldn’t underestimate the scale of the challenge,” the Canadian central bank’s Carney told reporters yesterday in Montreal. “Economies are going to grow initially because of the scale of monetary and fiscal stimulus, not in spite of it.” Government Bonds Carney left the benchmark rate at a record low 0.25 percent on June 4 and has said several times he has no plans to raise it over the next year. The Bank of Canada has said it also can use unconventional measures such as asset purchases to try to spur the economy if necessary. Canadian government bonds lost investors 2.7 percent so far this year, according to a Merrill Lynch & Co. index. The 10-year note’s yield fell four basis points today, or 0.04 percentage point, to 3.51 percent. It touched 3.69 percent yesterday, the highest since Nov. 14. The price of the 3.75 percent security maturing in June 2019 advanced 31 cents to C$102.06. For the week, the yield increased seven basis points and the price was down 59 cents.

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