Dollar mostly gains, but drops near parity with Canadian dollar for 1st time since July 2008

Dollar drops to near parity with Canadian dollar

NEW YORK — The dollar was mostly higher Tuesday morning in New York, but dropped to near parity with the Canadian currency for the first time since July 2008.

Parity means $1 fetches 1 Canadian dollar. The Canadian currency has gotten a boost from rising energy prices. Canada is a major exporter of oil, and crude prices are circling 18-month highs. Canada also has one of the smallest budget deficits of the major economies.

The dollar dropped as low as 1.0001 Canadian dollars Tuesday, just above parity. That’s the U.S. currency’s lowest point since July 2008. In later morning trading in New York, the dollar fetched 1.0005 Canadian dollars, down from 1.0031 Canadian dollars late Monday.

Meanwhile, the 16-nation euro dropped to $1.3394 from $1.3486 as inspectors from the International Monetary Fund were due in Athens to assess the Greek government’s plans to cut its debt. Debt woes in European countries, particularly Greece, have pushed the euro down from above $1.51 in late November.

The British pound fell to $1.5179 from $1.5298 amid uncertainty over the outcome of Britain’s upcoming election. British Prime Minister Gordon Brown has called for an election on May 6, but polls show a winner is uncertain. A “hung” government without a majority is seen as weak, which could be problematic given the U.K.’s debt problems.

The dollar slipped to 94.05 Japanese yen from 94.24 yen late Monday. On Monday, the dollar rose as high as 94.76 yen, its highest point since August 2009. The U.S. currency also edged up to 1.0694 Swiss francs from 1.062 francs.

An interest-rate hike by the Reserve Bank of Australia also helped boost the Australian dollar versus the U.S. currency. Rising interest rates can prompt investors to transfer funds as they seek out higher returns.