$1 Cdn = $1 US

The Canadian dollar reached parity with the U.S. greenback on Thursday for the first time in almost 31 years,capping a spectacular run that has seen it rise 62 per cent since 2002.

The loonie briefly reached $1.0003 USon foreign-exchange markets shortly before 11 a.m. ET, theBank of Canadasaid. Thecurrency spent much of the rest of the day flirting with parity — at one point trading at $1.0008 — before closing at 99.87 cents US, up 1.37 cents from Wednesday's Bank of Canada close.

Theprevious time the two currencies traded at par was in November 1976, just afterRené Lévesque's election victory in Quebec, which sent the Canadian dollar reeling.

By January 2002, the loonie had bottomed out atjust 61.79 cents US.Then came the steady run higher — a stunning rally that led to parity less than six years later.

For Canadians, it makes for cheaper imports from the U.S. and cheaper vacations in the U.S.But for industries that sell most of theirwares south of the border— manufacturers, lumber companies, auto-parts makers — it's been a nightmare. They're struggling to compete with abuilt-in 60-per-cent handicap, comparedwith five years ago.

"It's ahallmark of successful economies that they also have strong currencies," Ross Healey, CEO of Strategic Analysis Corp., told CBC News.

"Manufacturers may not like it very much, but unfortunately, that's the price we pay for running a tight ship."

U.S. dollar falters

The dollar's latest rise comes as the U.S. dollar falters against major currencies.

And it is the loonie that has been the biggest beneficiary of that weakness. So far this year, the Canadian dollar has gained more against the U.S. dollar than any other major currency. The loonie is up 16 per cent against the greenback, while the euro is up just six per cent, the British pound two per cent, and the Japanese yen about four per cent.

The U.S. dollar hit a new record low against the euro earlier Thursday, two days after the Federal Reserve made a surprise cut of one-half of a percentage point to a key U.S. interest rate. Economists had been expecting a quarter-point rate cut.

Commodity strength powersrise

But it has been the soaring price of oil that has provided much of the fuel for the loonie's long flight higher.

In global commodity trading, the price of a barrel of oil was at a record$83.32 US Thursday afternoon, up $1.39 USfrom Wednesday.

Gold prices surged to a 27-year high above $740 US an ounce, further bolstering the Canadian currency. Copper and wheat are at or near all-time highs. Canada produces and exports all of those commodities in abundance and the world has noticed.

Record levels of takeovers of Canadian companies have also lent power to the loonie, as have Canada's big budget and trade surpluses, and healthier housing market.

With the loonie quickly reaching parity with the U.S. buck, questions are arising about where the Canadian dollar can go once it passes $1 US.

Parity plus?

Strategic Analysis's Healey said he thinks $1.10 US is possible, perhaps higher.

"Given the catastrophe that the Fed unleashed on Tuesday, in terms of the interest rate cuts and the willingness to support the economy at any cost, $1.05 US, $1.10 US — I could make a case for $1.20 US if they don't cease that kind of activity, and that would be brutal," he said. "It's in the numbers."

Steve Butler, director of foreign exchange at Scotia Capital, agreed that the loonie may not stop at $1 US.

"With this much strength and this much momentum, I don't think parity is going to be the number that stops it," he told CBC News.

"I still think the fundamentals are so strong right now that we will see Canada continue to climb," he said.

But others say any gains willprobably be short-lived. "Longer-term, however, parity is a lofty goal, as the Canadian dollarwill likely lose some lustre once the U.S. economy regains its footing and commodity prices ease," said Benjamin Reitzes, an economist at BMO Capital Markets.

Back in the spring of 2006, National Bank of Canada was one of the first of the big banks to predict that the Canadian and U.S. currencies would reach parity. On Thursday, they were doing a bit of tongue-in-cheek gloating.

"It would appear that we could miss our forecast made back in April 2006 calling for currency realignment and parity with the USD by fall 2007 by a couple of days," National Bank economist Stéfane Marion said.

Fall begins with the fall equinox on Sunday.