98.64cents US . . . and rising
Sept 19, 2007 9:08:14 GMT -5
Post by Deleted on Sept 19, 2007 9:08:14 GMT -5
The Good , the Bad , the Ugly
The loonie takes flight and could soon catch up to the struggling American dollar.
OTTAWA -- The Canadian dollar took a giant leap toward parity with the U.S. greenback yesterday after the Federal Reserve in Washington surprised the market by cutting interest rates half a percentage point and world oil prices set a new high.
The double whammy of lower U.S. interest rates and a record price for oil of more than US$82 sent the loonie rocketing upward. The currency hit as high as 98.74 cents US before settling down to 98.64 at the close, up 1.36 cents from Monday. The close is the loonie's highest since January 1977.
"At this level, we'll see parity simply based on people's expectations that it'll hit parity," said Dale Orr, managing director of Global Insight Canada.
Others, including some foreign exchange analysts in the U.S., have predicted the Canadian dollar could reach as high as US$1.05 if the weakness in the American economy deepens.
The high dollar may make U.S.-made goods cheaper to buy in Canada and travel to the Florida a bargain for Canadian snowbirds.
It will also increase the number of cross-border shopping trips as thousands of Canadian consumers go to the U.S. to buy clothes, shoes and electronic gear that will suddenly be cheaper for their pocketbooks.
But it will be cold comfort to domestic manufacturers who have to try to sell goods south of the border at a discount or have been priced out of U.S. markets because of stiffer competition from American rivals.
Canadian Auto Workers economist Jim Stanford warned the sector will lose hundreds of thousands more jobs if the dollar remains at current levels.
He said the only manufacturers prospering at the moment are those directly tied to the Alberta oil sands.
"There is no silver lining in this cloud, believe me," he said.
lfpress.ca/newsstand/News/National/2007/09/19/4507822-sun.html
The loonie takes flight and could soon catch up to the struggling American dollar.
OTTAWA -- The Canadian dollar took a giant leap toward parity with the U.S. greenback yesterday after the Federal Reserve in Washington surprised the market by cutting interest rates half a percentage point and world oil prices set a new high.
The double whammy of lower U.S. interest rates and a record price for oil of more than US$82 sent the loonie rocketing upward. The currency hit as high as 98.74 cents US before settling down to 98.64 at the close, up 1.36 cents from Monday. The close is the loonie's highest since January 1977.
"At this level, we'll see parity simply based on people's expectations that it'll hit parity," said Dale Orr, managing director of Global Insight Canada.
Others, including some foreign exchange analysts in the U.S., have predicted the Canadian dollar could reach as high as US$1.05 if the weakness in the American economy deepens.
The high dollar may make U.S.-made goods cheaper to buy in Canada and travel to the Florida a bargain for Canadian snowbirds.
It will also increase the number of cross-border shopping trips as thousands of Canadian consumers go to the U.S. to buy clothes, shoes and electronic gear that will suddenly be cheaper for their pocketbooks.
But it will be cold comfort to domestic manufacturers who have to try to sell goods south of the border at a discount or have been priced out of U.S. markets because of stiffer competition from American rivals.
Canadian Auto Workers economist Jim Stanford warned the sector will lose hundreds of thousands more jobs if the dollar remains at current levels.
He said the only manufacturers prospering at the moment are those directly tied to the Alberta oil sands.
"There is no silver lining in this cloud, believe me," he said.
lfpress.ca/newsstand/News/National/2007/09/19/4507822-sun.html
