Canada’s dollar strengthened to a more than five-month high against its U.S. counterpart after 800 euro-area banks borrowed 529.5 billion euros ($712.2 billion U.S.) from the European Central Bank, easing liquidity concern.
The currency rose for a third day, advancing against all but one of its 16 most-traded counterparts, the New Zealand dollar. It was headed for a 1.5% gain this month versus the greenback as crude oil, the nation’s largest export, rose amid signs of economic recovery. Stocks advanced.
Canada’s currency appreciated 0.7%, the most in more than a month, to 98.85 cents per U.S. dollar Wednesday morning in Toronto. It strengthened to as much as 98.75, the most since Sept. 19. One Canadian dollar buys $1.0116 U.S.
The Canadian currency has appreciated 3.3% this year against its U.S. counterpart on increased demand for higher-yielding assets. The currency tends to rise and fall along with global equity markets as a proxy for economic growth.
The Bank of Canada meets next week to determine interest rates. Policy makers have held rates steady at 1% since September 2010 as concern about the potential for defaults among some European countries tempers an annual inflation rate that has exceeded the central bank’s 2% target for 14 straight months.
Before today, Canada’s currency had traded between 99.07 cents and $1.0071 against the greenback since Jan. 26.
