*Loonie highs and lows*
Historic high: $1.0614 on Aug. 21, 1957 / All-time low: 61.79 cents on Jan. 21, 2002 / Year ago: 90.67 cents / Two years ago: 80.11 cents / Three years ago: 73.20 cents
Loonie hits 94 cents as parity forecast
Jun 01, 2007 11:36 AM
Canadian Press
The Canadian dollar traded above 94 cents U.S. on Friday morning for the first time since July 1977.
Shortly before noon, the loonie was at 94.07 cents U.S., up 0.58 of a cent since Thursday.
The latest surge comes after CIBC World Markets economists (TSX: CM) predicted the Canadian dollar will be worth as much as the greenback by the end of this year.
Friday’s report cites an expected rise in Canadian interest rates and stronger-than-expected economic growth, along with hot commodity prices and an “avalanche” of corporate takeovers that require foreign acquirers to deal in Canadian dollars.
“With the national jobless rate plumbing 30-year lows and core inflation now bobbing above the Bank of Canada’s target range, our earlier assumption of the Bank of Canada intervening against a further rise in the Canadian dollar with rate cuts no longer seems tenable,” says CIBC World Markets chief economist Jeff Rubin.
In fact, he says the central bank will likely welcome a further rise in the currency, which was trading Friday morning at a three-decade high of over 93.7 cents US.
“The bank has already indicated that it expects to raise interest rates shortly,” Rubin said, referring to Tuesday’s Bank of Canada statement holding rates steady for now but warning of the likelihood of a tightening soon.
Meanwhile, the U.S. Federal Reserve looks set to cut rates late in the year, reducing the attractiveness of the American dollar, Rubin says.
“Between red-hot commodity and energy markets and huge capital inflows associated with an avalanche of (merger and acquisition) deals, the Canadian currency has plenty of octane left to take a concerted run toward parity against the greenback and hold it into at least the first quarter of 2008.”
