Official International Reserves

The Department of Finance announced today that Canada’s official international reserves decreased by an amount equivalent to US$59 million during January to US$32,959 million.

Details on the level and composition of Canada’s reserves as of January 31, 2006, as well as the major factors underlying the change in reserves, are provided below. All figures are in millions of US dollars unless otherwise noted.

		0-1 month	1-3 months	3-12 months	Total

Predetermined Short-Term Drains on Foreign Currency Reserves (Nominal Value)⁶

Foreign currency securities⁷	Principal	-769	-1,742	-2,123	-4,634
Foreign currency securities⁷	Interest	-35	-185	-1,031	-1,251
Aggregate short forward positions in foreign currencies vis-à-vis Canadian dollar		0	0	0	0
Aggregate long forward positions in foreign currencies vis-à-vis Canadian dollar		0	0	0	0
Total net drains		-804	-1,927	-3,154	-5,885
Additional Information (Nominal Value)
Undrawn, unconditional credit lines with banks headquartered outside Canada			6,000
Securities lent under repurchase agreements⁸			-2,607
Securities held under repurchase agreements⁹			1,555
Financial derivatives assets (net, marked to market)
Forwards			0
Swaps			2,801

Notes: There were no sales of gold settled in January. On January 31, gold holdings stood at 0.1 million ounces. The valuation is based on the January 31, 2006, London p.m. fix of US$568.75 per ounce. Net change in securities and deposits resulting from foreign currency funding activities of the Government. (Issuance of foreign currency liabilities used to acquire assets increases reserves, while maturities decrease reserves). During January, Canada bills decreased by US$358 million to a level of outstanding bills of US$1,819 million. "Return on investments" comprises US$88 million of interest earned on investments and a US$165-million decrease in the market value of securities resulting from changes in interest rates. "Revaluation effects" reflect changes in the market value of reserve assets resulting from movements in exchange rates. In January, the revaluation effect was mainly due to the appreciation of the euro. "Net government operations" are the net purchases of foreign currency for government foreign exchange requirements and for additions to reserves. Predetermined short-term drains include the Government’s contractual obligations in foreign currencies related to payments of principal and interest associated with securities and commitments under swaps and forward contracts coming due during the next 12 months. "Foreign currency securities" include maturities of foreign currency debt, cross-currency swap payments and an estimate of interest payments on foreign currency liabilities. "Securities lent under repurchase agreements" are included in total reserves. Collateral provided in securities-lending transactions is not included in total reserves. Cash invested under repurchase agreements is included in total reserves. Collateral provided in securities-lending transactions is not included in total reserves.

Future Release Dates

For further information on the Exchange Fund Account, please consult the 2004 Report on the Management of Canada’s Official International Reserves, located at www.fin.gc.ca/toce/2005/oir05_e.html.

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