By Akhil Shah

OTTAWA (MNI) – At the end of third quarter, Canada’s net foreign
debt decreased by C$31.8 billion to C$189.5 billion (at book value),
Statistics Canada reported Monday. This was mainly attributed to the
depreciating Canadian dollar against most major foreign currencies.

In the third quarter, the Canadian dollar lost 8.0% against the
U.S. dollar, 5.3% against the British pound, 11.7% against the Japanese
yen and 0.4% against the Euro.

During the same period, Canada’s international assets rose by
C$97.6 billion to C$1598.9 billion. This again was a result of an upward
revaluation of C$81.7 billion, arising from the depreciation of the
Canadian dollar. In the third quarter, Canadian direct investment abroad
accounted for the balance of the increase in international assets, the
agency reported.

Canada’s international liabilities increased by C$65.7 billion,
reaching C$1788.5 billion in the third quarter, with the depreciating
Canadian dollar providing a C$47.3 billion upward revaluation of foreign
debt. The increase in international liabilities resulted from ongoing
foreign investment in Canadian securities.

Canada’s net debt position with the U.S. advanced C$10.0 billion to
reach C$328 billion in the third quarter, extending the upward trend
that began at the end of 2008.

Canada’s net asset position with all other countries increased by
C$41.8 billion in the third quarter, reaching C$138.5 billion.

Canadian direct investment abroad rose by C$50.2 billion in the
third quarter, comparatively foreign direct investment in Canada rose by
C$7.2 billion, lifting net direct investment asset position by C$43.0
billion to C$82.9 billion. This was the largest increase since the
fourth quarter of 2008.

Domestic investors increased holdings of foreign securities by
C$23.8 billion in the third quarter, focused mainly on equities. In the
same period, non-resident portfolio investment in Canada increased by
C$49.6 billion and remained focused on Canadian money market
instruments.

Expressed in terms of tradable securities at market value, Canada’s
net foreign debt decreased by C$20.7 billion to C$233.6 billion,
reflecting losses on equity with foreign stork markets weakening by more
than their Canadian counterpart, the agency reported. Despite the upward
currency revaluation effect, Canadian holdings of foreign equities
decreased by C$48.0 billion, falling to C$507.5 billion. Similarly,
non-residents reduced holdings of Canadian equities by C$24.0 billion in
the third quarter.

— Akhil Shah is a reporter with Need To Know News In Ottawa

** Market News International Ottawa **

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