Loonie's downfall seen in reliance on weakness

For Stephen Poloz, the Canadian dollar's recent strength on optimism about the nation's economy is too much of a good thing.

A shift to a brighter outlook by the Bank of Canada governor in April helped propel the currency to its biggest monthly rally in almost six years against its US counterpart. The problem is a weaker exchange rate is exactly what the central bank says is needed to sustain the expansion.

That's why almost every forecaster in a Bloomberg survey is calling for the gains to come to an end. Although the loonie strengthened 5 percent in April versus US dollar, the median prediction is for it to weaken about 4 cents by mid-year from C$1.2172 at 12:36 pm on Monday in Singapore. One Canadian dollar buys 82.16 US cents.