The Canadian dollar has risen to 75 cents U.S. against the American currency for the first time since September 2022.
The Canadian dollar has strengthened against the greenback due largely to the Bank of Canada’s continued interest rate increases as the U.S. Federal Reserve pauses its monetary tightening regime.
The U.S. dollar has been volatile in recent months and weakened since the U.S. central bank announced last week a pause in its interest rate hikes after raising borrowing costs 10 consecutive times.
In contrast, the Bank of Canada raised its trendsetting overnight interest rate by 25-basis points earlier in June to 4.75%.
Both the Bank of Canada and U.S. Federal Reserve have indicated that more interest rate hikes could be coming this year should inflation continue to remain stubbornly high.
Some analysts are now forecasting that the Canadian dollar could rise to 77 cents versus the U.S. dollar in coming months.
Analysts note that the loonie is also benefitting from government stimulus spending in China, noting that infrastructure spending in China is lifting commodity-linked currencies such as the Canadian dollar.
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