By David Ljunggren
ST. JOHN'S, Newfoundland (Reuters) - Canada's finance minister on Tuesday indicated he could live with a more robust Canadian dollar, saying the recent rise of the currency reflected the country's economic strengths.
The dollar has rallied more than 13 percent against the U.S. greenback since early May and touched its strongest point in more than two years on Friday.
"I see the positive trajectory of the Canadian dollar as a clear reflection of our economic strengths," Finance Minister Bill Morneau told Reuters in an interview.
In the second quarter Canada's economy grew at its best pace since late 201, reflecting an improving outlook that prompted the Bank of Canada to raise interest rates in July and October after sitting on the sidelines for nearly seven years.
"Interest rate changes are something that comes along with a positive economic situation, so all of this is to be expected and something for us to watch. My view is that the economy is showing continued strength even at our current dollar valuation," said Morneau.
Asked at what level he might consider the Canadian dollar to be too expensive, Morneau replied that "I'm going to continue focusing on how we can invest in growth."
Speaking earlier on Tuesday on the margins of a cabinet retreat in Atlantic Canada, Morneau said he was watching carefully for any stresses that higher rates may put on indebted households.
The hikes prompted fears that some Canadians could soon find themselves in over their heads amid hot housing markets in major cities. Canadians' debt compared with household income is near a record high.
"As interest rates change, we are carefully watching the stress that that might place on Canadians," Morneau told reporters, noting that the "overwhelming majority" of Canadians are on a fixed-rate mortgage.
Morneau said he was also watching the housing market for signs of stabilization following measures taken by both the federal government and two provinces to rein in prices and ensure Canadians are not taking on too much mortgage debt.
In the interview, Morneau said he thought the housing market was moving in the right direction and added: "Our sense is that we need to remain vigilant".
He also dismissed rumors circulating earlier this year that he is unhappy in his post, saying he wanted to remain finance minister as long as he retained the confidence of Prime Minister Justin Trudeau.
"I have enjoyed this job from day one," he said.
(Reporting by David Ljunggren, writing by Leah Schnurr; Editing by Andrew Hay and Sandra Maler)