A worker at the Royal Canadian Mint checks the quality of loonies after they are pressed in Winnipeg. (CPimages/Marianne Helm) |
TORONTO (CP) - The Canadian dollar will be worth as much as the U.S. greenback by the end of the year, CIBC World Markets economists predict (TSX:CM). Friday's report cites an expected rise in Canadian interest rates and stronger-than-expected economic growth, along with hot commodity prices and an "avalanche" of corporate takeovers that require foreign acquirers to deal in Canadian dollars. "With the national jobless rate plumbing 30-year lows and core inflation now bobbing above the Bank of Canada's target range, our earlier assumption of the Bank of Canada intervening against a further rise in the Canadian dollar with rate cuts no longer seems tenable," says CIBC World Markets chief economist Jeff Rubin. In fact, he says the central bank will likely welcome a further rise in the currency, which was trading Friday morning at a three-decade high of over 93.7 cents US. "The bank has already indicated that it expects to raise interest rates shortly," Rubin said, referring to Tuesday's Bank of Canada statement holding rates steady for now but warning of the likelihood of a tightening soon. Meanwhile, the U.S. Federal Reserve looks set to cut rates late in the year, reducing the attractiveness of the American dollar, Rubin says. "Between red-hot commodity and energy markets and huge capital inflows associated with an avalanche of (merger and acquisition) deals, the Canadian currency has plenty of octane left to take a concerted run toward parity against the greenback and hold it into at least the first quarter of 2008." |