The Canadian dollar set a 30-year-high Tuesday, closing at US98.64 cents after investors got word of a drastic interest rate cut south of the border.The loonie rose 1.36 cents higher than Monday's close as it traded on Toronto's financial market. The dollar went as high as 98.74 cents Tuesday afternoon,
Economists say it could only be a matter of days before the loonie reaches parity with the American dollar.
"You got the two ingredients, commodity prices and interest rate differentials, both going in the dollar's favour," said Don Drummond, chief economist for TD Bank speaking to CTV Newsnet Tuesday evening.
Speculation surrounding the rate cut and record oil prices helped push the dollar past yesterday's close of US97.28 cents. But the real surge came after the U.S. Federal Reserve cut its key funds rate half a point to 4.75 per cent to curtail a possible recession.
The move by half a point was double the quarter point economists were expecting.
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