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Canada recorded a $10.1 billion net foreign asset position in the first quarter of 2009. As in the fourth quarter of 2008, the revaluation of foreign assets owing to the depreciation of the Canadian dollar more than offset the impact of a current account deficit.
International assets rose 3.1% during the quarter to $1,532.8 billion, while international liabilities increased 2.9% to $1,522.7 billion. Non-residents invested $31.9 billion during the quarter, concentrated in Canadian marketable debt liabilities. For their part, Canadian investors added $16.3 billion to their foreign assets holdings. The net effect of currency fluctuations resulted in an additional increase of $13.1 billion to the net foreign asset position.
Volatility in the value of the Canadian dollar relative to foreign currencies continued in the first quarter of 2009, with the Canadian dollar appreciating against some major foreign currencies while depreciating against others. This was in contrast to fluctuations in the fourth quarter of 2008, where the Canadian dollar depreciated against most major currencies.
The international investment position presents the value and composition of Canada's foreign assets and liabilities to the rest of the world. Canada's net international investment position is the difference between these foreign assets and liabilities. The excess of international liabilities over assets can be referred to as Canada's net foreign debt. The excess of international assets over liabilities can be referred to as Canada's net foreign assets. The valuation of the assets and liabilities in the international investment position are measured at book value, unless otherwise stated. Book value represents the value of assets and liabilities recorded in the books of the enterprise in which the investment is made.
Currency valuation
The value of assets and liabilities denominated in foreign currency are converted to Canadian dollars at the end of each period for which a balance sheet is calculated. Most of Canada's foreign assets are denominated in foreign currencies while less than half of our international liabilities are in foreign currencies. When the Canadian dollar is appreciating in value, the restatement of the value of these assets and liabilities in Canadian dollars lowers the recorded value. The opposite is true when the dollar is depreciating.
In the first quarter, the Canadian dollar depreciated 3.4% against the US dollar and 1.9% against the British pound. However, it appreciated 5.3% against the Japanese yen, and 1.4% against the euro, moderating the impact on Canada's net international investment position in the quarter. Nevertheless, since more than half of Canada's international assets are denominated in US dollars, the overall contribution of currency fluctuations resulted in an increase in foreign assets, specifically $28.2 billion for those assets denominated in US dollars.
Canada's net asset position on direct investment increased further, reaching $151.9 billion at the end of the first quarter. The value of Canadian direct investment abroad was up $19.6 billion (+3.1%), with the bulk of the increase due to the revaluation effect of the depreciation of the Canadian dollar relative to the US dollar and most of the balance accounted for by sustained direct investment abroad. Foreign direct investment flows in Canada were stagnant during the first quarter, such that the net foreign direct investment position continued to advance.
Non-residents returned to Canadian bond and equity investments while continuing to increase their positions in Canadian money market instruments during the first quarter of 2009 for a total inflow to Canada of $23.3 billion. The revaluation effect of the drop in the Canadian dollar added $7.5 billion to the value of Canadian bond liabilities denominated in foreign currencies.
Canadian investors increased their foreign portfolio assets by $13.4 billion in the quarter, mainly in equity, following substantial divestment in the fourth quarter of 2008. Canadian portfolio investment abroad was boosted by another $5.5 billion in the first quarter, due to the drop in the Canadian dollar. However, the net foreign portfolio investment position continued to decrease (-$11.5 billion) in the quarter.
Canada's overall net international investment position can also be calculated with portfolio assets and liabilities of tradable securities valued at market prices. By this measure, Canada's net foreign asset position decreased to $37.0 billion in the first quarter of 2009. This reflected the continued decline of global equity markets, in which Canadian markets fared better than many international markets. As a result, Canadian stocks held by non-residents decreased much less (-$7.2 billion) than foreign equities held by Canadians (-$43.9 billion).
Available on CANSIM: tables 376-0037, 376-0039 to 376-0041, 376-0055 to 376-0057, 376-0059.
Definitions, data sources and methods: survey number 1537.
The first quarter 2009 issue of Canada's International Investment Position (67-202-X, free) will soon be available.
For more information, contact Client Services (613-951-1855; infobalance@statcan.gc.ca). To enquire about the methods, concepts or data quality of this release, contact Christian Lajule (613-951-2062) or Komal Bobal (613-951-6645), Balance of Payments Division.
Fourth quarter 2005 | Fourth quarter 2006 | Fourth quarter 2007 | Fourth quarter 2008 | First quarter 2009 | |
---|---|---|---|---|---|
$ billions | |||||
Assets | |||||
Canadian direct investment abroad | 452.2 | 524.7 | 515.4 | 637.3 | 656.9 |
Portfolio investment abroad | |||||
Foreign bonds | 82.3 | 124.0 | 135.4 | 141.9 | 144.7 |
Foreign bonds at market value | 88.8 | 133.7 | 153.3 | 176.0 | 178.4 |
Foreign stocks | 196.8 | 227.3 | 226.6 | 278.9 | 292.7 |
Foreign stocks at market value | 445.0 | 582.2 | 603.8 | 451.6 | 424.3 |
Foreign money market | 13.1 | 20.0 | 7.5 | 3.5 | 5.8 |
Foreign money market at market value | 13.1 | 20.1 | 7.5 | 3.5 | 5.8 |
Other investments | |||||
Loans | 45.9 | 72.9 | 77.3 | 94.5 | 98.2 |
Deposits | 120.8 | 132.2 | 157.9 | 225.2 | 225.6 |
Official international reserves | 38.0 | 41.0 | 40.6 | 51.4 | 53.1 |
Official international reserves at market value | 38.4 | 40.9 | 40.7 | 53.4 | 54.9 |
Other assets | 47.2 | 45.9 | 37.9 | 53.5 | 55.8 |
Total assets | |||||
At book value | 996.4 | 1,188.1 | 1,198.6 | 1,486.2 | 1,532.8 |
With portfolio investment at market value | 1,251.4 | 1,552.7 | 1,593.9 | 1,694.9 | 1,699.8 |
Liabilities | |||||
Foreign direct investment in Canada | 397.8 | 438.6 | 491.3 | 504.9 | 504.9 |
Portfolio investment | |||||
Canadian bonds | 387.9 | 409.2 | 384.7 | 454.1 | 473.1 |
Canadian bonds at market value | 414.5 | 431.5 | 399.5 | 467.9 | 473.6 |
Canadian stocks | 93.5 | 99.0 | 95.8 | 96.0 | 97.7 |
Canadian stocks at market value | 271.4 | 318.7 | 371.0 | 241.7 | 237.1 |
Canadian money market | 20.8 | 24.5 | 22.0 | 34.9 | 44.5 |
Canadian money market at market value | 20.9 | 24.7 | 22.2 | 35.0 | 44.6 |
Other investment | |||||
Loans | 38.2 | 53.0 | 61.2 | 64.6 | 64.4 |
Deposits | 201.0 | 226.8 | 243.5 | 301.2 | 314.2 |
Other liabilities | 22.0 | 21.6 | 26.0 | 23.9 | 23.9 |
Total liabilities | |||||
At book value | 1,161.3 | 1,272.7 | 1,324.4 | 1,479.4 | 1,522.7 |
With portfolio investment at market value | 1,365.8 | 1,514.9 | 1,614.7 | 1,639.1 | 1,662.8 |
Net international investment position | |||||
At book value | -164.9 | -84.6 | -125.7 | 6.7 | 10.1 |
With portfolio investment at market value | -114.4 | 37.7 | -20.7 | 55.9 | 37.0 |