Canada’s trade surplus fell in September to its lowest level since December 1998 as exports decreased and imports rose in the month the Canadian dollar returned to parity with the U.S. greenback.

Exports fell 2.3% to $37.7 billion in September, the lowest level since October 2006, while imports rose 2.2% to $35.1 billion. The country’s trade balance with the world narrowed to $2.6 billion, Statistics Canada said today.

The trade surplus with the United States shrank to $6.2 billion. Canada’s trade deficit with countries other than the United States grew to $3.5 billion.

Between January and September 2007, based on the Bank of Canada’s monthly noon spot rate average, the Canadian dollar appreciated 13% against the greenback.

The loonie reached parity with the U.S. dollar on Sept. 20. It briefly pushed past $1.10 US in early November, meaning trade figures could show a worsening picture for Canadian exporters as their products become more expensive for U.S. buyers.

Statistics Canada said sharp declines were seen in September exports of machinery and equipment, and industrial goods and materials, the two most important sectors in terms of value. Those declines overshadowed gains in automotive products, energy products and other consumer goods.

Canadians imported more energy products, industrial goods and materials, automotive products and other consumer goods in September.