Canada’s Loonie Hits Three-year High

The Canadian dollar has grown to its highest level in three years. The dollar hasn’t been this strong since November 15, 2007. After the Bank of Canada sold $3 billion, two-year government bonds with an average yield of 1.867, the dollar gained against 13 of the 16 most traded currencies.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, stated “Yields are a more compelling explanation of the strength of the Canadian dollar.” He added “The Bank of Canada has already taken action to normalize money-market conditions so bonds are giving high yield and still benefiting from the economic recovery.”

In the midst of increasing violence in Libya, the price of oil, Canada’s biggest commodity export, is also rising. Reports indicate that the cost of oil is up by about 17 percent since February. Traders are worried that the Libyan unrest could spread to the worlds biggest crude oil producer, Saudi Arabia.

At market close on Wednesday, the loonie was up 29 basis points at 103.23 US cents; surging at one point to 96.68 to the American dollar in Toronto trading. The country remains hopeful that the rise in the dollar is a sign that the economy is strengthening.

Loonie Hits Three-year High