Loonie briefly hits parity with American dollar

The Canadian dollar closed 0.16 of a cent higher to 99.88 cents US on Tuesday, as the U.S. dollar stood at C$1.0012, down 0.16 of a cent.

Earlier in the day, for the first time in almost two years, the loonie and the greenback were worth the same.

The dollar was trading at just over US$1.00 after the opening bell.

The last time the beaver buck was worth as much as its US counterpart was in July 2008.

Most economists believe the loonie is going to hang around parity for the next couple of years.

The Deputy Chief Economist with TD Financial tells 660News there are a number of reasons why our dollar is more valuable.

Craig Alexander says there is weakness in the US currency.

Secondly, the price of oil is trading at an 18-month high, hanging around US$86/barrel.

Finally, investors are already banking on the Bank of Canada boosting its key lending rate this summer, well before the US Federal Reserve does the same south of the border.

However, Alexander says there is also a down side to a stronger dollar and the bottom line of many businesses, especially exporters, are going to be impacted. He believes the days of the Canadian dollar trading in the 80 cent U.S. range are gone, replaced with a currency that is worth more like 95 cents American.