Canada's international investment position

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Fourth quarter 2011 (Previous release)

Canada's net foreign debt was up $34.7 billion to $213.1 billion at the end of the fourth quarter, resulting largely from the impact of the appreciation of the Canadian dollar against most major foreign currencies and from continued foreign investment into the economy.

During the quarter, the Canadian dollar gained 3.1% against the US dollar, 3.4% against the British pound, 2.9% against the Japanese yen and 6.4% against the euro.

Canada's international assets declined $10.5 billion to $1,598.7 billion. As these assets are denominated in foreign currencies, the appreciation of the Canadian dollar resulted in a $42.1 billion downward revaluation. This more than offset outward Canadian transactions in the quarter.

Canada's international investment position

 Canada's international investment position

Chart description: Canada's international investment position

Note to readers

The historical revision to the international investment position (IIP) is scheduled to be released in October 2012. At that point, market valuation will be used as the main measure of the IIP accounts as opposed to the book value presentation currently in use as the main measure. For more information, please see Valuation of assets and liabilities.


The international investment position presents the value and composition of Canada's 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 Canada's 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 Canadian dollar is depreciating.

Canada's international liabilities were up $24.3 billion to $1,811.9 billion. Ongoing investment by non-residents, amounting to $51.2 billion in the fourth quarter, accounted for the increase in international liabilities. Most of this investment was in the form of purchases of Canadian securities. However, this increase in international liabilities was moderated by the appreciation of the Canadian currency, which resulted in a $21.4 billion downward revaluation of that portion of Canadian debt denominated in foreign currencies.

Net foreign debt with the United States up again

Canada's net debt position with the United States increased $29.2 billion to $354.6 billion in the fourth quarter. This net debt position has been on an upward trend since the end of 2008. Canada had a net asset position of $141.5 billion with all other countries in the fourth quarter, down $5.6 billion from the previous quarter.

Net direct investment asset position edges down

The value of Canadian direct investment abroad was down $7.8 billion. Although additional investment added $13.1 billion to the direct investment position, the appreciation of the dollar had a downward impact of $20.3 billion on the overall position. On the liability side, the value of foreign direct investment in Canada increased by $1.2 billion. As a result, the net direct investment asset position edged down to $75.3 billion.

Net portfolio investment liability expands further

Holdings of Canadian securities by non-residents increased $12.4 billion to $818.5 billion at the end of 2011. This reflected sustained investment flows, moderated by the downward impact of the appreciation of the Canadian dollar on foreign currency-denominated instruments. On the other hand, the stocks of foreign securities held by Canadian investors edged down to $409.5 billion. As a result, Canada's net liability position on securities expanded further in the quarter.

These developments reflect changes in the underlying investment trends since 2007, combined with the general appreciation of the Canadian dollar over the same period. Since the beginning of 2007, Canadian investors' holdings of foreign bonds have decreased 11.8%, while holdings of foreign money market instruments have declined 76.3%.

Since the financial crisis, Canadian holdings of foreign securities have decreased as a percentage of total international assets. However, on the liability side, foreign investment in Canadian securities has increased over the last four years as a percentage of total international liability.

Share of investment in securities

 Share of investment in securities

Chart description: Share of investment in securities

Gains in foreign equity markets moderate increase in net foreign indebtedness

Canada's overall net international investment position can also be calculated with tradable securities valued at market prices. By this measure, Canada's net foreign debt rose $10.0 billion to $233.1 billion at the end of the fourth quarter. This largely reflected stronger increases on foreign stock markets than on Canadian ones, which translated into gains on Canadian holdings of foreign equities. Canadian holdings of foreign shares were up $28.8 billion, compared with a $15.1 billion increase in non-resident holdings of Canadian equities.

Available without charge in CANSIM: tables 376-0055 to 376-0057 and 376-0059.

Definitions, data sources and methods: survey numbers, including related surveys, 1534 and 1537.

The fourth quarter 2011 issue of Canada's International Investment Position (67-202-X, free) will be available soon.

For more information, contact Client Services (613-951-1855; To enquire about the methods, concepts or data quality of this release, contact Christian Lajule (613-951-2062) or Marie-Josée Lamontagne (613-951-5179), Balance of Payments Division.