by felixcorner » Fri Jan 30, 2009 05:20:14 AM
Setting aside the fact that the Canadian dollar is higher than the US dollar right now, the US economy is much larger than the Canadian economy and the strength of the dollar encouraged many foreigners to hold dollars as a hedge against high inflation in their country. That demand for US dollars kept the US dollar above the Canadian dollar. Now that the US dollar is plummeting foreign demand for US dollars has fallen. That is one of many reasons the Canadian dollar has surpassed the US dollar.