Loonie crosses the parity line for first time in 3 decades

TORONTO — The last time it happened, ‘Saturday Night’ by the Bay City Rollers was the number one song on the charts. Today, 31 years later, the Canadian loonie is once again worth as much as the American greenback — and climbing.

The Canadian dollar reached parity with its U.S. counterpart this morning for the first time since 1976. It teased traders early this morning by hitting 99.97 cents and then jumping to C$1.002 at 11:00 a.m., before settling back down to 99.93 again, Bloomberg reports.

The last time the Canuck dollar was trading the same
as its U.S. counterpart, disco and bellbottoms were cool.

The loonie has climbed (or — depending on how one looks at it — the U.S. dollar has fallen) rather quickly in the last five years. It has risen 38 cents since 2002, and nearly 14 cents in 2007 alone.

In recent months, the greenback has been severely affected by the troubled housing sector in the U.S. and a national credit crisis. Also, the country’s steep trade deficit has pushed up currencies of its trading partners, especially Canada, which is still riding a robust economy.

According to media reports, financial experts believe the loonie will climb a few cents higher in the coming days and weeks before leveling off.

For Canadian businesses the news is both good and bad. Service companies and industries that buy equipment from the U.S. will benefit. However, sectors whose revenues are in American dollars and costs in Canadian currency have been feeling the pinch for some time now.

Manufacturers, namely the auto sector in Ontario, and exporters of commodities like agriculture and forestry — as well as the industries that service them, like trucking and transportation — are big losers with a loonie valued more than the U.S. dollar.

The tourism sector, as well as retail businesses close to the American border, are also negatively impacted.