OTTAWA — Canadian technology firms and startups, already facing a looming recession and possible cost-cutting measures including layoffs, have also been grappling with the effects of a stronger U.S. dollar since August—prompted, in part, by the U.S. Federal Reserve’s aggressive interest rate hikes.

Until the last several months, Canadian businesses had enjoyed a more favourable exchange rate, with the loonie valued at around $1.25 per U.S. dollar from Christmas 2020 to this summer. In September, the U.S. dollar-loonie pair jumped up to more than $1.35 and has experienced some ups and downs over the past eight weeks, returning to pre-pandemic levels.