Loonie boosted by Buffett offer

Tue Feb 12, 2008 10:14am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By John McCrank

TORONTO (Reuters) - The Canadian dollar rose against the U.S. dollar on Tuesday, helped by an announcement by billionaire investor Warren Buffett that Berkshire Hathaway had offered to assume the liabilities of the monoline bond insurers, injecting some calm into frazzled financial markets.

Domestic bond prices, with no major domestic data to influence direction, fell on Buffett's announcement.

At 9:26 a.m. EST, the Canadian dollar was at US$1.0044, making a greenback worth 99.56 Canadian cents, up from 99.85 U.S. cents, valuing a U.S. dollar at C$1.0015, at Monday's close.

"This could be seen as a very positive development," said Matthew Strauss, senior currency strategist at RBC Capital Markets.

"If we see another strong rally from this point forward, I think it would favor the Canadian dollar."

Despite several recent pieces of domestic data that came in above market expectations, the outlook for the Canadian economy has been hurt by the prospects for growth south of the border.

Exports contribute around 40 percent to the Canadian economy and the United States takes in around three-quarters of Canadian exports.

The main concern in financial markets as of late has been the health of U.S. bond insurers, which guarantee over $2.4 trillion of debt.   Continued...