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Canada’s dollar strengthened to a seven-month high versus its U.S. counterpart on speculation the Bank of Canada raising borrowing costs in the world’s 10th-largest economy will add to the currency’s allure.

The Canadian currency is 0.9 percent higher during the past week for the best performance among 10 currencies tracked by Bloomberg Correlation-Weighted Indexes. Bank of Canada Governor Mark Carney reiterated yesterday while answering questions at the Senate’s banking committee in Ottawa that rate increases “may become necessary” as the economy recovers.

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“We’ve put a bit of water between us and parity,” said Kit Juckes, head of foreign-exchange research at Societe Generale SA, by phone from London. “The pressure for the Bank of Canada to eventually raise rates can only grow,” as the U.S. economy recovers and its central bank is on “permanent hold.”

Canada’s currency, nicknamed the loonie, touched 98.07 cents per U.S. dollar, the strongest since Sept. 19, before trading at 98.18 cents at 7:47 a.m. in Toronto. One Canadian dollar buys $1.0185.

Bloomberg.com