Loonie rise a concern for Canadian economy: BoC ( USDCAD ) (by Ashley P. Lau)

CHICAGO (MarketWatch) -- The Canadian dollar strengthened Tuesday after the Bank of Canada held its target rate unchanged at 1% and noted stronger-than-expected economic activity. The Canadian dollar (cur_usdcad) rose 0.8%, with one U.S. dollar now buying 96 Canadian cents. The loonie's steady rise over the past few months, however, has become a concern for the Canadian economy, officials said, as the stronger currency weighs on demand for the country's exports. The loonie is up 3.7% this year. "The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy," the Bank of Canada said in a statement, noting concerns of "weaker-than-expected" net exports, acommpanied by larger declines in import prices. The Bank's decision to leave its target rate unchanged is its fifth consecutive hold since it raised rates 0.25% last September.