The Canadian dollar will reach parity with the U.S. greenback by the end of 2008, predicts Clément Gignac, chief economist and strategist at National Bank Financial Ltd.

“The Canadian dollar continues to climb, trading recently at a 30-year high in excess of US92¢. Is our currency headed for parity with the U.S. dollar in the medium term? We think so,” Gignac says in a note.

On Friday, the loonie went as high as US92.80¢ in intraday trading. It hasn’t been that high since Oct. 3, 1977.

The dollar closed at US92.64¢, up 0.45 of a cent from Thursday.

“The strength of the Canadian dollar can no longer be laid solely to weakness of the greenback. The loonie has appreciated against almost all currencies, including the so-called satellite currencies strongly influenced by commodity prices,” he adds.

“On the basis of these Canadian-specific cyclical and structural factors, we expect the loonie to be trading at par with the U.S. dollar by the end of next year. Of course the adjustment of the greenback is not over, and parity could come sooner or later than the eve of 2009,” Gignac suggests.

He points out that NBF was bullish on the loonie well before its rise became conventional wisdom. Back in May 2006, it predicted parity within 18 to 24 months. It is now reiterating that call, and noting that many market pundits are now coming around to its view.

In what it calls “a major shift of perception since last spring”, many observers now consider that parity is only a matter of time, NBF says. “Even the governor of the Bank of Canada now recognizes that the recent appreciation of the currency is mostly due to fundamental rather than speculative factors — a considerable contrast with the skepticism about the firmness of the loonie that he expressed a year ago in parliamentary committee,” he concludes.