With the loonie hitting a 20-month high last week, experts expect the Canadian dollar to near parity with the U.S. greenback by later this week.

The loonie ended last week at 98.2 cents U.S. and reached its highest level against the U.S. dollar since July 2008. The last time the Canadian dollar reached parity was in May 2008.

The rise of the Canadian dollar comes after better than expected employment data in February and the suggestion that the Bank of Canada may raise interest rates later this year.

The loonie dropped 0.13 of a cent to 98.07 cents U.S. after Monday trading. But it could rise later this week, when the February Consumer Price Index is released.

"If we get a surprisingly high reading on that front, then expectations of Bank of Canada interest rates hikes will just build incredibly and that could be the trigger that pushes us through parity if that CPI report is higher than expected," Doug Porter, deputy chief economist at BMO Capital Markets, told The Canadian Press.

"It sounds a bit counterintuitive to see a strong inflation report being good for a currency, but that's the way currency markets read this at least over the short term is that strong inflation equals interest rate hikes which equals a more robust currency."

Don Drummond, TD Bank's senior economist, notes that the Canadian dollar's rise says more about the state of the American economy than the Canadian one.

He says that unlike the last time the dollar hit parity, the recent rise is not tied to Canadian commodity prices.

"Last time it was mostly about Canada, and it was about the tear we had in commodity prices . . . this time around commodity prices aren't playing that big a deal . . . it's largely about the U.S.," he told Canada AM Monday. "The world has turned its sentiment against the U.S."

He said the U.S.'s high debt-to-GDP ratio makes Canada look like a much safer option.

"The U.S. is looking very weak in the world's investors' eyes," he said.

Drummond says parity opens up a number of opportunities for Canadians beyond cheap cross-border shopping.

It is a good time to buy U.S. property for Canadians, and the Canadian manufacturing sector can use the cheaper U.S. dollar to reinvest in machinery and improve productivity.

"If we're going to have a dollar at parity, we are going to have to have productivity that is similar to the United States," he said.

The Conference Board of Canada released a new report Monday saying the manufacturing industry will not suffer as much as many assume due to the high dollar.

The board says the manufacturing sector has internationalized much of its operations to protect against currency fluctuations.

The most vulnerable industries according to the Conference Board are transportation and warehousing, retail and information and cultural sectors.