Management of Canada’s Official International Reserves

This annual report provides details on official international reserves operations, primarily related to the Exchange Fund Account (EFA), which is a portfolio of assets held under the Currency Act to provide foreign currency liquidity to the Government and to promote orderly conditions for the Canadian dollar in the foreign exchange markets, if required.

The report notes:

• The market value of Canada’s official international reserves increased to US$60.6 billion as of March 31, 2011 from $56.7 billion as of March 31, 2010. This increase reflects the launch of the Government’s new liquidity plan, in which liquid foreign exchange reserves will increase by US$10 billion by the end of 2011–12.
• The EFA continued to earn positive returns for the Government in 2010–11 as the foreign currency assets held in the account earned an average positive spread of 49 basis points over the foreign liabilities used to fund the assets, up from 42 basis points in the previous year.
• The EFA’s investment exposure was managed prudently within acceptable limits specified in the Statement of Investment Policy.