BUSINESS

Canadian dollar rises as commodities advance, traders look to Greek debt talks

01/23/2012 08:44 EST | Updated 03/24/2012 05:12 EDT
TORONTO - The Canadian dollar closed higher Monday amid rising commodity prices and hopes for a resolution to talks between Greece and its private creditors.

The currency moved up 0.57 of a cent to 99.27 cents US.

Greece's private creditors include banks and other investment firms. The government wants them to swap their Greek bonds for ones with a 50 per cent lower value, thereby cutting the country's debt pile by some €100 billion.

But the interest rate on the new bonds is one of the main sticking points in negotiations and analysts expect the debt talks will drag on until a summit of European Union leaders next Monday.

Both sides say a deal is nevertheless very close. An agreement is necessary if Greece is to get the next batch of bailout cash that would prevent a devastating debt default.

Meanwhile, Dutch finance minister Jan Kees de Jager said Greece's private creditors may be forced to take losses if they can't reach a deal to cut the country's massive debt pile voluntarily. He is the first finance minister of the 17 countries that use the euro as their currency who has openly raised the prospect of forcing losses on banks and other investments firms.

Oil prices ran up after the European Union formally adopted an oil embargo Monday against Iran and a freeze of the assets of the country's central bank. The package is part of sanctions meant to pressure the country to resume talks on its nuclear program.

Iran has threatened to close the Strait of Hormuz if the U.S. and other countries impose more sanctions on it because of its nuclear program, and two Iranian lawmakers stepped up threats to block the waterway following the EU move.

Many analysts doubt that Iran could set up a blockade for long, but any supply shortages would cause supplies to tighten.

The March crude contract on the New York Mercantile Exchange gained $1.25 to US$99.58 a barrel.

Metal prices also advanced with copper ahead five cents to US$3.80 a pound while gold climbed $14.30 to US$1,678.30 an ounce.