December 3, 2001 - The loonie's days may be numbered. Earlier this month a poll revealed more than half of Canadian business leaders think Canada should consider adopting the U.S. dollar. Conducted just after the Canadian dollar hit a record low of 62.30¢ U.S. on Nov. 9, the poll also showed that, even if Canada doesn't adopt the greenback, many companies will increasingly set prices for big-ticket items in U.S. dollars.
The commodity boom, and the price of oil in particular, is what's been driving the Canadian dollar to an all-time high. If you did two lines on a chart, tracing the price of oil and the value of the loonie this year alone, you would find they track very closely together. After bottoming out at around $52 at the beginning of the year, the price of oil has rocketed to the mid-90s. And the Canadian dollar, which was thought to be pretty fully priced at 85 cents back in January, crossed $1.08 briefly yesterday, hitting a new all time high. That's a 21-per-cent appreciation relative to the U.S. dollar in only 10 months. Wow.
Only six years ago, the loonie was languishing in the low 60s, back when oil was in the low 20s, which only makes the point. "They are very closely linked," says Jeremy Leonard, an economist with the Institute for Research on Public Policy.
Nothing, it seems, can stop the dollar, so long as nothing can stop the price of oil.
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