Canadian dollar dips below $0.70 USD for first time since 2003

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From the Globe and Mail:

Canada now has a 70-cent dollar.

The loonie dipped under the 70-cent (U.S.) level, touching as low as 69.9 cents, having rallied earlier to as high as 70.5 cents.

The currency has been largely hit by oil prices, which dipped below $30 a barrel at one point today, the domestic economic outlook and the different timelines for interest rates in Canada and the United States.

We’ve already written plenty on the loonie, and how its largely unexpected plunge has the potential to affect everything from expansion to Quebec City to the Los Angeles Kings’ ability to re-sign Milan Lucic. It’s a big story, no matter how much Gary Bettman tries to downplay things.

True, the NHL is in a different place than it was the last time the Canadian dollar sunk to its current levels. There was no salary cap, for one.

But consider the following quote from former Vancouver Canucks owner Arthur Griffiths, who sold the franchise in 1997 when the loonie was around $0.73 USD, and headed lower.

“The team turned into the greatest money pit in terms of losing money year after year,” Griffiths told Business In Vancouver. “I was collecting Canadian dollars and paying players in U.S. dollars.”

Two years later, the Quebec Nordiques moved to Denver. The year after that, the Winnipeg Jets moved to Phoenix. Those moves weren’t entirely due to the currency disparity, but it was a significant factor.

Again, the NHL is in a different place than it was back then.

“If you look at purely the salary cap and the exchange rate, you can do the math,” Montreal Canadiens owner Geoff Molson said in October, “but then, there’s revenue that comes to us in American dollars.”

So no, we’re not predicting another era of southern migration. Not yet anyway.

What we’re saying is that the NHL is unique among the four major leagues. Seven of its 30 franchises collect revenue in Canadian dollars, and the loonie’s strength the past decade, before the oil crash, was a boon for the league as a whole.

At the same time, it made things a lot harder for lower-revenue American clubs like the Coyotes and Panthers. Those franchises were dragged into a game they couldn’t afford to play, with the salary cap rising from $39.0 million in 2005-06 to $71.4 million this season.

“Ideally for us, the Canadian dollar tanks and the cap goes down, not up,” Arizona GM Don Maloney quipped a year ago.

He was joking, sort of, but that’s exactly what the loonie has done — it’s tanked.

And the scary thing — at least for Canadian teams, as well as certain American teams who are up against the cap — is that it may not be done tanking.

Related: Next season’s salary cap pegged at $74.5 million