TORONTO - The Canadian dollar closed higher Monday after the Greek parliament voted to approve a slate of tough austerity measures aimed at securing a crucial bailout.
But, the currency was well off the highs of the day as prices for gold and copper deteriorated and questions were raised about whether Greece will actually get the money.
The loonie rose 0.35 of a cent to 100.07 cents US after earlier going as high as 100.29 cent US.
Greece had to agree on a series of measures, including cuts in civil service jobs, minimum wages and welfare to secure a euro130-billion bailout package needed to meet a bond payment on March 20.
Without the bailout and a related bond swap deal with private creditors, Greece will be pushed into a disorderly default which could result in a collapse of the country’s financial sector and destabilization of the wider European and global markets.
But there is the risk that some private creditors may resist the deal to swap their bonds for new ones with a lower value.
On Monday, a spokeswoman for Germany’s finance ministry said the final approval of a new bailout won't be given until early March. That means the eurozone will have to split the final bailout approval from a related debt relief deal that will take several weeks to implement and which has to be finalized ahead of the March 20 bond repayment.
Marianne Kothe said that the other euro countries will first want to see how many of Greece’s private creditors participate in the bond swap which is designed to cut Greece's debt by euro100 billion.
Relief over the Greek austerity vote had earlier extended to commodity markets, but copper and gold prices lost early gains.
The March crude contract on the New York Mercantile Exchange gained $2.24 to US$100.91 a barrel.
March copper was down two cents to US$3.84 a pound while April bullion lost 40 cents to US$1,724.90 an ounce.