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The move by the Canadian dollar today, which caused it to be on par with the U.S. dollar, was the first time it's happened since 1976.

Canada's dollar surpassed the U.S. dollar at 4:16 p.m. EST. It rose to $1.0008 before backing off to 99.87 U.S. For the Canadian dollar it was quite an accomplishment, as it had reached a record low in 2002 of 61.76 to the American dollar.

"It's a long time since those heady days," said Frank McKenna, 59, deputy chairman of Toronto-Dominion Bank, the country's third-biggest lender, and a former ambassador to the U.S. "Canadians should understand that this is a badge of confidence in our country."

A lot of people aren't aware that Canada has the world's eigth-largest economy, and is growing exponentially with the increasing demand for commodities around the world.

Canadian Impact

While Canada has definitely been increasing its economic power because of the growing need of natural resources around the world, part of the reason for the resurgence of their currency against the U.S. dollar is the weakness in general of the U.S. dollar against all major currencies.

Canadian Finance Minister Jim Flaherty acknowledged that part of the reason the Canadian dollar has risen is its fiscal strength, at the same time he also concedes the fall of the value of the American dollar as a cause also.

He also says he's concerned about the fall of the U.S. dollar: "Our forestry industry and many of our manufacturers supply the [housing] market in the United States, and it is going through a difficult time," a subdued Flaherty told reporters. He added most of the cars built in Canada are sold in the United States.

Another unwanted side effect is what the Canadian Manufacturers and Exporters warned Tuesday, saying for ever penny the dollar goes above par, the Canadian economy will lose $1.5-billion per year on a national basis.

American Impact

For America, it could help U.S. exports become more competitive, which would help its manufacturing industry, but would also increase prices from imports. American tourists would also lose spending power from the weakening U.S. dollar. On the other hand, foreign tourists will flock to the country to take advantage of lower prices.
 
With foreigners also buying up huge amounts of U.S. debt, the falling U.S. dollar could cause them to buy elsewhere. As demand decreases, the government would have to pay higher rates at auctions to lure buyers to U.S. treasuries, notes, and bonds. That could eventually raise the cost of borrowing on all Americans.

Mulinational Corporations

The falling dollar could help those corporations operating internationally, as goods made in America would be more affordable to international businesses and consumers. That would make it harder for manufacturers in other countries to price goods lower than the US domestic competition.