Canadian Dollar Gains on the U.S. Unit, Aided by Increasing Foreign Investment
The Canadian dollar is making a quiet comeback.</br></br>Like their economies, the currencies of the U.S. and Canada are closely related. But as interest rates rise in Canada, the Canadian dollar is gaining on its U.S. counterpart, traders and analysts say. And as the Canadian unit rises, it lures more foreign investment -- particularly from Japan -- which adds to its strength.</br></br>Canada's narrowing budget deficit, deregulation of its financial markets and a perceived bottoming of commodity prices also have whetted investor appetite for the Canadian currency.</br></br>"Our recommendation is buy Canada," says Lawrence A. Kudlow, chief economist at Bear, Stearns & Co., New York. "That implies that anything denominated in Canadian dollars should do well."</br></br>Because the Canadian and U.S. currencies are closely related, both have tumbled steadily against the major European and Japanese units over the past 22 months. But the daily movements between the Canadian and U.S. units usually are relatively small.