Canada dollar rises on hopes for U.S. crisis plan

Thu Sep 18, 2008 5:05pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar rose 0.7 percent against the U.S. dollar on Thursday, getting a boost from a "buy North America" bid after U.S. Treasury Secretary Henry Paulson was reported to have suggested a more comprehensive solution to the ongoing financial crisis.

Canadian bond prices fell as a late-session rally in stock market took away the safe haven appeal of government debt.

The Canadian dollar ended the North American session at C$1.0618 to the U.S. dollar, or 94.18 U.S. cents, up from C$1.0688 to the U.S. dollar, or 93.56 U.S. cents, at Wednesday's close.

The late session rally was sparked by reports that U.S. Treasury Secretary Henry Paulson has talked to congressional leaders about a Resolution Trust Corp-type solution to the financial crisis.

The RTC was created in 1989 to clean up huge losses in the savings and loan industry that had, at the time, been the biggest financial crisis since the Great Depression of the 1930s.

The reports led to a surge in stock markets, which also boosted North American currencies, as Wall Street recorded its strongest day in six years on a rally that largely came in the last hour of the session.

"Right now the market is grasping for anything positive," said Shane Enright, currency strategist at CIBC World Markets.

"You've obviously had a lot of carnage on Wall Street, so I think they're simply clinging to anything that seems to be a ray of hope at this stage."   Continued...