Canadian Dollar Reaches Parity with Greenback

For a brief moment this afternoon, the Canadian dollar was worth more than its American counterpart. It closed at 99.87, its highest level since the Ford Administration.

Canada’s dollar traded equal to the U.S. currency for the first time in three decades, capping a five-year run on the back of booming demand for the nation’s commodities.

The Canadian dollar rose as high as $1.0008, before retreating to 99.87 U.S. cents at 4:16 p.m. in New York. It has soared 62 percent from a record low of 61.76 U.S. cents in 2002. The U.S. dollar fell as low as 99.93 Canadian cents today. The Canadian currency last closed above $1 on Nov. 25, 1976, when Pierre Trudeau was Canada’s prime minister.

The move to parity marks a milestone for a currency dubbed the loonie for the bird that adorns the nation’s one-dollar coin. Parity also symbolizes Canada’s emerging clout in a world economy increasingly short of the energy, grains and metals the country produces. “It’s a long time since those heady days,” said Frank McKenna, 59, deputy chairman of Toronto-Dominion Bank, the country’s third-biggest lender, and a former ambassador to the U.S. Canadians should understand that this is a badge of confidence in our country.”

Canada, the world’s eighth-biggest economy, has benefited from rising demand for copper, gold, wheat and oil from neighboring U.S. and emerging economies such as India and China. The country is the world’s largest producer of uranium, the second-biggest exporter of natural gas, and sits on the largest pool of oil reserves outside the Middle East. Canada is also the world’s second-largest exporter of wheat, which rose to a record this month.

This is great news for our largest trading partner and, almost certainly, good news for us. American goods are now more affordable, after all. That the rise comes mostly from the strength of their economy rather than the weakness of ours is, obviously, a bonus.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. DC Loser says:

    Well, it’s not just the Canadian Dollar. The Euro hit an all time high today of $1.40 to the Euro. The general trend is of the dollar sliding against all major currencies.

  2. Triumph says:

    This is great news for our largest trading partner and, almost certainly, good news for us. American goods are now more affordable, after all.

    It is important to remember our exports so far this year are $40 billion less than our imports, so I am not sure why you think it is necessarily good news. This means that we buy much more from the Canadians (including 27% of our imported energy) than they buy from us. This development makes Canadian products more expensive for us.

    If the trade balance was flipped, your assessment may be more convincing.

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  13. Paul says:

    This has much more to do with problems with US debt than the strength of the Canadian economy. A few more years of this and we will have to rename the US dollar the US peso. I have always thought it was BS that I should accept the gospel that a lower dollar is “good news” for me. I’m not an exporter. Why is it good news that a vacation to western Europe would now be horrendously expensive? Or that my dollar doesn’t go nearly as far when I want to buy Asian electronics? Maybe US exporters will trickle some money down my way, but frankly that doesn’t sound like a good trade for having most of my assets seriously devalued.

  14. DC Loser says:

    Someone said this about the sliding dollar on another site: If the dollar’s slide is good for exports, then we should be exporting like gangbusters to Europe. But that’s not happening. If a depreciating currency is good for exports, Zimbabwe should be selling things out the wazoo, but you don’t see that happening either.

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  16. Triumph says:

    Maybe US exporters will trickle some money down my way, but frankly that doesn’t sound like a good trade for having most of my assets seriously devalued.

    Yes–the only thing we are going to get out of a weak US dollar vis a vis the Canadian dollar is inflation, given the fact that they are our largest source of imported energy.

    If the dollar’s slide is good for exports, then we should be exporting like gangbusters to Europe. But that’s not happening.

    DC Loser is right on–we havent had a trade surplus with the UK since Clinton was president. Our trade deficit with the EU ran $116 billion last year. We are also at a $88 million trade deficit with the Japs.

    The only bright spot has been Iceland where we have lodged surpluses for the past four years.

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  18. Paul says:

    If a depreciating currency is good for exports, Zimbabwe should be selling things out the wazoo, but you don’t see that happening either.

    Well, I’m no expert, but I was in Zimbabwe two years ago (I’m embarrassed to say) and from the looks of it they probably do have a trade surplus now (if you don’t count foreign aid), because no one is importing any goods there — who wants to sell their goods for Zim dollars? At a market where years before I had to pay good money for local products, now the merchants politely begged me to trade them my shoes, my socks, anything but their worthless money, because they could not at any price find imported products to buy.

    Anyway, wouldn’t it be nice if we could have a trade surplus by making better products and having a more responsible savings rate rather than hoping to impoverish ourselves to the point that we can’t afford the imports anymore?

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  26. Andy says:

    Triumph is quite correct. This is bad news for Canada (and America) and will reduce overall trade between our countries because of the imbalance.