Canadian Dollar Gains Most in Two Months as Stocks, Oil Climb

The Canadian dollar gained the most in more than two months after crude oil advanced for the first time in three days and global stocks strengthened, encouraging investors to buy assets from commodity-exporting countries., Bloomberg 1/24/2008 12:24:23 PM

Canada's dollar rose against 15 of 16 most-actively traded currencies as increasing equities bolstered speculation the global economy will weather a U.S. slowdown, underpinning demand for oil and metals. The currency also advanced on expectations Canada's interest-rate advantage over the U.S. may widen.

The Canadian currency increased 1.4 percent to C$1.0094 per U.S. dollar at 2 p.m. in Toronto, from C$1.0241 yesterday. One Canadian dollar buys 99.08 U.S. cents. It was the biggest one- day gain since Nov. 2. It climbed 1.2 percent against South Korea's won and 1.6 percent versus the Japanese yen.

The Bank of Canada lowered its main interest rate a quarter-percentage point to 4 percent on Jan. 22. The U.S. Federal Reserve cut borrowing costs three-quarters of a percentage point to 3.5 percent the same day, pushing the rate lower than Canada's for the first time in three years.

Commodities such as oil and gold make up half of Canada's exports. Crude for March delivery rose 2.3 percent to $88.96 a barrel. Gold surpassed $900 an ounce for the first time in more than a week.

The S&P/Toronto Stock Exchange Composite Index increased 2.3 percent as it gained for a third straight day. U.S. stocks rose for a second day while shares in Asia and Europe climbed.

The Canadian dollar remained higher after the Bank of Canada lowered its growth forecast for this year because of weak export demand from the U.S. and reiterated it will probably cut interest rates again in 2008. Gross domestic product will expand 1.8 percent, down from an October prediction of 2.3 percent.

Canadian Dollar Gains Most in Two Months as Stocks, Oil Climb