Canada’s dollar rallied to a more than 13-month high against its U.S. counterpart as the Federal Reserve’s plan to purchase bonds spurred demand for higher- yielding assets.
The U.S. central bank said yesterday it would keep interest rates near zero until 2015 and begin buying mortgage securities to spur the economy of Canada’s biggest trading partner. The so- called loonie rose to a more than six-month high against Japan’s yen, where interest rates are also near zero.
“To the extent that the U.S. dollar remains under pressure, this is a broad move and the Canadian dollar is going with it,” said David Watt, chief economist at HSBC Bank Canada in Toronto. However, the Canadian dollar “will run out of steam and I can’t see us getting back to the lows we saw in July 2011.”
The Canadian dollar rose 0.4 percent to 96.49 cents per U.S. dollar at 8:30 a.m. in Toronto. It touched 96.33 cents, the strongest since Aug. 4. One Canadian dollar buys $1.03638.
The currency touched 94.07 cents per dollar on July 26, 2011. Its record is 90.58 cents with the decade average of C$1.1518.
The loonie, as the currency is known because of the waterfowl on the C$1 coin, rose as much as 1.3 percent to 81.008 yen, the strongest since May 4, before trading at 80.841 yen.
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