By IANS,
Toronto : The Canadian dollar has almost reached parity with the US greenback, with the loonie, as the Canadian currency is known, touching 98 cents US Wednesday. This is the highest level the Canadian currency has gained against the sinking greenback in 14 months.
From 77 cents US in March to almost parity with the US dollar, the Canadian currency has risen more than 20 percent since then.
As oil and commodity prices rise, it is only a matter of time before the loonie gains parity with the US dollar. The last time it had parity with the greenback was in September 2007. In fact, the loonie had gone to touch the 110-cents US mark in November 2007.
With no signs of recovery of the greenback given the ballooning US deficit, the Canadian currency is unstoppable unless some bad economic news derails it.
But with a country which sends 78 percent of its exports to the US, the rising currency is posing challenges for Canadian manufacturers and exporters.
With the US market already sluggish, Canadian exporters face bleaker times as their currency rises against the US dollar.
Prime Minister Stephen Harper has already expressed his concern over the runway loonie posing a threat to the economic recovery.
The Bank of Canada, which had also previously warned of intervention to stop the rise of the Canadian dollar, will
announce its interest-rate decision next week.
The country’s central bank may outline its strategy of dealing with the problems posed by the runaway currency.
Apart from Canadian exports, the rising loonie will also hit tourism from the US which accounts the bulk of visitors to this country.
Even retailers are bound to suffer as Canadians will cross the border in large numbers to shop in the US on the strength of their currency vis-�-vis the US greenback.