Canadian loonie again rises above US dollar

May 20th, 2008 - 10:45 am ICT by admin  

By Gurmukh Singh
Toronto, May 20 (IANS) Thanks to soaring global oil prices, the Canadian dollar has once risen against the US dollar, closing at $1.06 against the greenback at the weekend. Having reached parity with the greenback in 31 years on September 20 last year, the Canadian dollar, known as the loonie, has just about retained parity with it since then.

In fact, in mid-November it rose to the record levels of $1.10 (US), driven up by higher prices for Canadian natural resources and the slowdown in the US economy. As the fuel prices have continued to climb and the US slowdown has only deepened, the loonie has hovered in the region of 98-99 cents (US) against the greenback.

After suffering the biggest one-day tumble of 2.19 cents against the US dollar in almost 50 years on March 18 when oil and gold prices fell sharply, it quickly recovered the lost ground against the dollar.

Since the world economic slow-turn is forecast to last well into the middle of 2009, Canadian economists see little drop in the loonie because of global demand for Canadian oil and commodities. They also forecast that the loonie will end the year on the higher side of the US dollar and could go up to $1.06 against the greenback by the middle of next year.

Thanks to the country’s abundant resources of oil, natural gas and gold, the Canadian economy has fared much better than other major industrialised nations.

However, the higher Canadian dollar has also hit the manufacturing sector in the powerhouse province of Ontario, leading to loss of thousands of jobs and closure of auto plants by American giants General Motors and Ford.

Tourism from the US, which pumps more than $5 billion into the economy of Toronto city alone, has also taken a hit because of the flying loonie.

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