OTTAWA – The Canadian Manufacturers and Exporters (CME) says business leaders should plan on a stronger Canadian dollar throughout 2011.

CME president Jayson Myers says he expects the loonie to stay at par with its U.S. counterpart, or slightly above it, through the balance of this year – fluctuating between US$1.00 and US$1.04.

He allowed that anything much higher than US$1.04 would be problematic for Canadian companies.

"A great deal of this year ahead is going to be based on the recovery of customer demand, but clearly a high dollar puts Canadian products in a much less competitive position," Myers told media on Wednesday.

He said the pressure of the dollar should be offset by stronger customer demand and economic growth, particularly in the United States.

Overall, the CME forecast that manufacturing, exports and business investment will drive broader economic growth as government spending slows.

The Canadian dollar has hovered around parity with the U.S. dollar for several weeks and rallied to a 2-1/2 year high on Wednesday.

The risk of pronounced volatility throughout the year would "make it difficult for companies to manage prices and costs in that environment," said Myers.

Finance Minister Jim Flaherty said in a speech earlier on Wednesday that no one should expect a return to the days when the Canadian currency was undervalued.