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Well, we couldn’t just leave this story hanging considering that just yesterday, the Synergy Merchant Services Blog reported that the Canadian dollar was about to reach parity with the American greenback. Just one day later, it has become official. Canada’s loonie is now of equal value to the U.S. single.
Confirmed by a QMI Agency report earlier today, the loonie and its American counterpart currently sit at the same value for the first time since July 2008. Before that, Canadian currency had reached parity with American currency in September 2007. At the time, it had been over 30 years since it last occurred.
The loonie is flying high today as it gained 0.1% this morning. In fact, it eventually slightly surpassed the American dollar in value by reaching as high as 100.12 cents US later in the day. Following its ascent to parity in 2007, the Canadian dollar then dropped as low as 77 cents US in October 2008.
The QMI Agency report affirms however, that this time around, the loonie’s strength will remain for a much longer time. Said BMO Capital Markets deputy chief economist Doug Porter: “The bigger picture is that we will be above parity for some time. We are entering a brave new world for the Canadian dollar.”
The loonie’s current rise to parity has come as a result of Canada’s rich resources which are fueling the national economy – now “seen as one of the strongest in the industrialized world, expanding at 5% in the fourth quarter.” According to Knightsbridge Foreign Exchange President Rahim Madhavji, “Canada has everything global investors want.”
At this point, Canadian consumers are overjoyed at the idea that American goods won’t run them any extra cash as the loonie and the greenback are both of equal value. Canadian exporters, on the other hand, now face greater resistance to purchases from overseas buyers who will regard their goods as more expensive. As Porter exclaimed, “a strong economy is good for consumers, but bad for producers.”
The QMI Agency report revealed that some companies have already taken measures to “pass on some of the benefits of the strong currency to Canadians.” Porsche, for example, reports that they will be slashing their prices by between $4,000 and $10,500. Who knew that the loonie’s rise to parity may result in the sale of more luxury vehicles?
The Synergy Merchant Services Blog will, from time to time, monitor the state of the Canadian dollar. It is hard not to take pride in the fact that Canada’s economy is growing stronger at a pace far exceeding that of most countries. The loonie is, indeed, flying high.