The Canadian dollar has been trading at a discount for some time, but strategists at Desjardins Group suggest it may not be a value trap. They argue that some of the structural challenges weighing on the currency could be easing.
According to chief economist Jimmy Jean and foreign exchange strategist Mirza Shaheryar Baig, the Canadian dollar is approximately 22 per cent undervalued against the U.S. dollar when measured by the purchasing power parity model.
The analysis indicates that the loonie's prolonged weakness might not be permanent, and there could be opportunities for investors who see its current level as a buying point.