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Winnipeg Free Press - PRINT EDITION

Russians give Canadian dollar a boost

By: Staff Writer

26/11/2009 1:00 AM | Comments: 0

TORONTO -- The Canadian dollar edged closer to parity with the U.S. currency on Wednesday, following news that the Russian central bank will invest in the loonie and diversify away from the greenback in a move that could indicate a global trend.

The Russian central bank said it plans to invest some of its foreign exchange reserves in the loonie to reduce exposure to the U.S. dollar.

John Whalley, a distinguished fellow in global economics with the Canadian Institute for Governance Innovation, said the Russian announcement could indicate the beginning of global change toward diversification.

"This diversification I think is going to increase and spread and it is to Canada's advantage," he said.

"It could indeed induce some switching into Canadian dollars from the U.S. side. It could be the beginnings of a trend that could involve global realignment."

The Canadian dollar rose to its highest level in a week, closing at 95.65 cents U.S., up 1.13 cents from Tuesday's close.

The loonie is a commodity currency, meaning the Canadian economy and currency are linked to the performance of commodities, which have been on a strong uptrend in the past months.

"If you look at strength in currencies around the world it is in the economies that are stable and have resources and oil," like the Canadian and Australian dollars and Norwegian krone, Whalley said.

Meanwhile, the U.S. dollar slid to a 15-month low against the euro and to 87.56 Japanese yen Wednesday

Earlier in the day the U.S. dollar was trading at 87.36 yen, its weakest level since January and close to 14-year lows.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition November 26, 2009 B6

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