TORONTO – The recent strength of the Canadian dollar has been a surprise, given that many economists expected it to stay weak throughout much of the year.
But a combination of several factors has sent the currency higher, including an underperforming U.S. economy that has yanked down the value of the American dollar against many international currencies, including the loonie.
Global prices for key Canadian commodities have also been higher than anticipated.
Mark Chandler, head of foreign exchange strategy at RBC Dominion Securities Inc., says the high Canadian inflation rate over the first half of 2014 is also having an influence as it puts to rest any thoughts that interest rates may fall.
On Friday, the Canadian dollar was above 93 cents US per share, and rose as high as 93.99 earlier this month.
That’s about the same level as it ended 2013 — which is still low by post-recession standards.
Some forecasts had called for the Canadian dollar to drop to around 90 cents US this year and stay there until the middle of 2015.