OTTAWA — The Canadian dollar’s three-week offensive on the U.S. greenback brought it ever closer to parity on Wednesday, but raised concerns its unrelenting pace could become a “huge concern” if it continues unabated.
Propelled by a series of solid economic reports, the loonie has gained almost 5% over the past two and a half weeks, and closed Wednesday up 36 basis points at 98.98 US cents.
The race to parity has not elicited the usual hand-wringing about how the high dollar will hurt Canada’s exporters. Industry Minister Tony Clement added his voice to the argument Wednesday, arguing, as did Finance Minister Jim Flaherty a day earlier, that Canadian companies are adjusting by improving their productivity.
Yet TD Economics issued a report Wednesday warning that the dollar’s rapid climb, as much as its higher value, could put a dent in the country’s rosy economic performance, which has been marked by gains in gross domestic product, manufacturing, productivity and employment. The latest economic indicator came Wednesday in a report showing Canadian wholesale sales surging 3% in January to $44.4-billion, the biggest increase in three years.
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