Canadian Dollar Gains for Second Day as Crude Oil Increases

By Cordell Eddings

Sept. 4 (Bloomberg) -- Canada's currency advanced for a second day after crude oil rose as Hurricane Ike gained force in the Atlantic, spurring concern it may disrupt U.S. oil supplies.

``Oil and commodities in general are going to be the main driver going forward today and in the next few months,'' said Doug Porter, deputy chief economist at BMO Capital Markets in Toronto.

The Canadian dollar appreciated 0.3 percent to C$1.0595 per U.S. dollar at 8:37 a.m. in Toronto, from C$1.0627 yesterday. One Canadian dollar buys 94.38 U.S. cents.

Crude oil rose as much as $1.25 today, or 1.1 percent, touching $110.60 a barrel. The price reached a record $147.27 a barrel on July 11.

The Bank of Canada left its benchmark interest rate unchanged yesterday at 3 percent. The rate is ``appropriately accommodative,'' while inflationary pressures ``remain elevated,'' the central bank said. It didn't hint that slow growth may lead to a rate reduction.

``The less dovish remarks yesterday gave'' Canada's currency ``a big lift when it seemed to be on a one-way streak down,'' Porter said. ``Now it's managing to hold on to its gains.''

Canada's currency, dubbed the loonie because of the aquatic bird on the one-dollar coin, will slip to C$1.11 against the U.S. dollar by the end of 2009, according to the median forecast of economists surveyed by Bloomberg News.

To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net