Canadian dollar gets boost from liquidity measures
By John McCrank
TORONTO (Reuters) - The Canadian dollar pushed higher against a stronger U.S. dollar on Tuesday, as stock markets, which are being looked to as a barometer for the health of the U.S. economy, rallied on the back of a coordinated move by central banks to help ease liquidity strains.
Domestic bond prices fell across the curve after the Bank of Canada joined the U.S. Federal Reserve and other central banks, in the liquidity boosting measures.
The Canadian currency closed at US$1.0067, valuing a U.S. dollar at 99.33 Canadian cents, up from US$1.0033, or 99.67 Canadian cents, at Monday's close.
For its part in the coordinated central bank operations, the Bank of Canada said it would lend up to C$4 billion to market players via 28-day term purchase and resale agreements.
The move was dwarfed by the Fed's announcement south of the border, where up to $200 billion of Treasury securities for 28 days were put on the table.
A spokesman for the Bank of Canada noted this country has experienced a much lesser degree of liquidity pressures.
The Bank of England, the European Central Bank and the Swiss National Bank also participated in the operations.
Investors cheered the moves, which eased concerns about a deepening credit crisis and a possible U.S. recession. Continued...