CT: Canadian dollar approaching parity with U.S. dollar
The Canadian dollar is creeping closer to parity with the American greenback, opening strong on the trading market Tuesday morning at 97.13 cents US.
The dollar slipped to 96.9 before the North American trading market's opening bell but it was expected to keep gaining strength as the value of the American dollar continued to plummet against other world currencies.
The weakness of the greenback drove the value of the loonie up from about 95.75 cents on Friday.
Michael Kane, a business reporter with BNN, told CTV News Channel that the weak U.S. dollar may give Canadians more purchasing power but that it will cause serious financial struggles for the manufacturing industry.
Kane said the international market might look elsewhere for cheaper deals on commodities and other Canadian exports. The markets indicate that the Loonie will likely soar in value to match the greenback and will likely stay that way for a while, he said.
"When it does hit parity, and maybe goes beyond a little bit, we'll see it stuck there for what is being called 'an extended period of time,'" he said. "If the normal value of the Canadian dollar is at par, then the manufacturing industry in Canada which sells into an international market will have to take it very, very seriously because what it means is that other countries can supply manufacturing goods perhaps at a cheaper rate."
The Loonie has soared mainly because of a heightened demand for commodities in the global market. The Canadian currency is strongly viewed by global traders as being linked to commodities.
The demand for commodities has gone up because the U.S. dollar took a nosedive, Kane said.
"It has a slingshot affect because commodities are priced in U.S. dollars," he said. "So when the U.S. dollar goes down against other currencies, it makes gold and oil, platinum and copper relatively more attractive to non-U.S. investors, so that has the effect of people coming in and buying up gold and having the effect of driving prices of gold higher."
"That's a positive for the Canadian currency because our economy is tied into the price (of commodities) so its like a doubling of the influence when the U.S. dollar gets weaker and that's what we're seeing here today," he added.
