The Canadian dollar will remain near parity with the U.S. dollar for most of 2013, according to the Bank of Montreal (BMO) – and businesses should take advantage of the situation before the loonie falls further.
BMO chief Doug Porter also expects the weakness to persist, with the dollar falling to near 90 cents U.S. over the next five years.
The loonie has been coasting below parity for months, last inching above the benchmark level on Feb. 7. Over the past six months, the loonie has dropped more than five per cent, Porter said, and closed ahead 0.06 of a cent to 97.47 cents U.S. at the end of last week.
“There are a number of factors at play with the loonie’s slide, ranging from generalized U.S. dollar firming, to softer commodity prices, to a widening trade gap, to a less hawkish Bank of Canada,” Porter said.
BMO’s head of commercial banking, Steve Murphy, encouraged businesses to take advantage of a loonie close to parity with the U.S. greenback before it falls further. “Now is the time for businesses to leverage the strength of the loonie,” he said. “For those businesses looking to upgrade their processes, technology, and equipment to boost their productivity, the high value of the Canadian dollar can provide them with additional purchasing power when importing this equipment and purchasing supplies and inventory from the global market.”