By Chris Fournier Feb. 18 (Bloomberg) -- Canada’s dollar traded at almost a four-week high against its U.S. counterpart after a government report showed annual inflation accelerated, encouraging the Bank of Canada to raise interest rates later this year. “It keeps the Bank of Canada on track with where they see monetary policy,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “It’s likely to keep the Canadian dollar at the forefront of coveted currencies. It’s a positive number for the Canadian dollar.” The currency gained 2 percent last week on an increase in the price of oil and gold and speculation that the central bank will begin raising its 0.25 percent target lending rate once the conditional commitment to hold it at a record low expires at the end of June. The Canadian currency, known as the loonie, traded at C$1.0458 per U.S. dollar at 9 a.m. in Toronto, compared with C$1.0464 yesterday. It reached C$1.0410 on Feb. 16, the strongest level since Jan. 20. One Canadian dollar equals 95.62 U.S. cents. The consumer price index increased 1.9 percent in January from a year earlier, the most since November 2008, Statistics Canada said today in Ottawa. The median forecast of 22 economists in a Bloomberg survey was for a 1.8 percent advance. Bank of Canada Governor Mark Carney has pledged to keep the target lending rate at a record low 0.25 percent through June unless the inflation outlook shifts. Policy makers predict that inflation on a quarterly basis won’t return to policy makers’ 2 percent target until the third quarter of next year. Foreign Buying Foreigners bought an unprecedented C$109 billion ($104 billion) of Canadian securities last year, double the previous record, led by bonds. Foreigners purchased C$11.2 billion in December, Statistics Canada reported today from Ottawa. Economists surveyed by Bloomberg said the report would show non-residents bought a net C$6.5 billion of Canadian securities during the month, according to the median of five responses. Canadian government debt was little changed. The yield on the 3.75 percent security due in June 2019 rose less than 1 basis point, or 0.01 percentage point, to 3.48 percent. The price of the 10-year bond fell 4 cents to C$102.15. The Canadian dollar pared its gain today after a U.S. government report showed the number of Americans filing first- time claims for unemployment insurance unexpectedly increased last week. The U.S. is Canada’s largest trading partner. The loonie has gained 0.6 percent this year in the fourth- best performance versus the greenback among the 16 most-traded currencies tracked by Bloomberg. Crude oil for March delivery decreased for the first time in three days, falling 0.8 percent to $76.70 a barrel. Standard & Poor’s 500 Index futures expiring in March retreated 0.4 percent. --Editors: Dennis Fitzgerald, James Holloway To contact the reporter on this story: Chris Fournier in Montreal at +1-514-940-6476 or cfournier3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at +1-212-617-8988 or dliedtka@bloomberg.net

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