Canadian Dollar Rises After Central Bank Cuts Less Than U.S.


The Canadian dollar rose from a four-month low after the central bank cut its benchmark lending rate a quarter-percentage point, keeping it above borrowing costs in the U.S.

The currency gained the most in a month as the reduction in the rate to 4 percent left it half a percentage point higher than the U.S. main benchmark lending rate. The Federal Reserve's three quarters of a percentage point rate cut gave Canada its widest interest-rate advantage since November 2004.

Canada's dollar rose 1 percent, the most since Dec. 17, to C$1.0244 per U.S. dollar at 1:14 p.m. in Toronto. One Canadian dollar buys 97.61 U.S. cents. The U.S. dollar weakened against 14 of the 16 most-traded currencies.

The Bank of Canada lowered its main interest rate for the second time since December and signaled it will act again to shield the economy from the threat of a recession in the U.S.

The target rate for overnight loans between commercial banks was cut to 4 percent at today's regularly scheduled meeting, the lowest since May 2006. All 22 economists in a Bloomberg News survey predicted the move.


TradingEconomics.com, Bloomberg
1/22/2008 10:36:57 AM