Cdn. Dollar Closes Lower After Briefly Surpassing US$1.10 Mark
Posted November 7, 2007 12:00 pm.
This article is more than 5 years old.
It was a real roller coaster for the Canadian dollar on Wednesday. The Canuck buck opened the day at an unheard of 1.10 U.S. cents, but it didn’t stay on its lofty perch. By the end of trading, it was back down to where it had been the day before, closing at a still hefty 107.75 cents U.S., a loss of almost three quarters of a cent. The buck briefly reached 1.10.31 during early trading but fell as the day wore on. But many analysts suggest it could easily reach that milestone mark again.
The surge is attributed to a jump in oil prices, which rose to US$98 a barrel overseas, a new trading record. Fears about declining U.S. supplies and news of an attack on an oil pipeline in Yemen served to spike the prices. Weakness in the U.S. dollar is also a factor.
“I’d like to say we’re nearing the end of the run, but I can’t say that confidently, ” said BMO Capital Markets deputy chief economist Douglas Porter, who calls the dollar’s rise “nothing short of incredible.”
However Bank of Canada senior deputy governor Paul Jenkins warned about the downside of the strong dollar and the negative impact it could have here.
“The combined effect of a weaker U.S. outlook and a higher assumed level for the Canadian dollar implies that net exports will exert a significant drag on the Canadian economy,” Jenkins said.
According to Ontario Premier Dalton McGuinty, the province is suffering on account of the strong buck and he wants Ottawa to step in and help.
“That support could be found on a number of fronts,” he suggested. “Investment in MoveOntario 2020 so we can have a more free-flowing transportation infrastructure which enhances productivity. They can come to the table and help us with special supports for manufacturers and the forestry sector.”
The loonie has been at parity with the U.S. dollar since September, the first time in decades that they’ve been at par with each other. Since then it’s broken all-time records as it continues to rise in comparison with its American counterpart.
