TORONTO - The soaring Canadian dollar closed above $1.05 U.S. on Wednesday for the first time in decades and appears headed for uncharted waters as a combination of factors pushes it further and further ahead of the American currency.
The Canadian dollar ended the official trading day in Toronto at 105.85 cents U.S. That's the highest closing price for the loonie since Aug. 21, 1957 and just short of a modern-era high of 106.14 cents U.S.
In after-hours trading, the loonie broke through that historic barrier to trade at 106.17 cents U.S., according to the Bank of Montreal's currency-trading desk in Toronto. That would put it above the mark that the Bank of Canada considers a record high.
The remarkable strength of Canada's currency over the past few months can be traced to a number of factors, including the country's strong domestic economy and demand for Canadian-produced resources such as crude oil and metals.
Wednesday's increase of 93-100s of a U.S. cent was helped by the positive response to tax cuts announced the previous day by Finance Minister Jim Flaherty and by weakness in the U.S. dollar against other major currencies, and by a sharp increase in global crude oil prices.
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The Canadian dollar is seen as a petro-currency since the country is a net exporter of crude oil. Higher prices for crude oil tend to push the loonie higher.
On Wednesday, crude futures rose a remarkable $4.15 to a record U.S. $94.53 a barrel on the New York Mercantile Exchange, because of smaller than expected inventories and the declining value of the dollar.
The American dollar fell to a new low against the euro in North American trading on Wednesday after the Federal Reserve lowered a key interest rate by a quarter point to 4.5 percent.
