Canada’s net foreign asset position fell by $310.8 billion in the first quarter of 2026 to $1.36 trillion, the second consecutive quarterly decline and the lowest level since the third quarter of 2023.
The decline left Canada’s net international investment position, the difference between foreign assets owned by Canadians and Canadian assets owned by foreign investors, down from $1.83 trillion at the end of September 2025.
Market losses were the main factor behind the drop in the first quarter. The value of Canada’s international assets and liabilities was reduced by changes in market prices, cutting the country’s net foreign asset position by $380.5 billion.
Canada’s exposure to global equity markets played a major role. At the end of March, equities accounted for 68.5 per cent of Canada’s international assets and 49.3 per cent of its liabilities. While the Canadian stock market gained 3.3 per cent during the quarter, U.S. markets fell 4.3 per cent and European markets declined 3.8 per cent.
A weaker Canadian dollar helped offset some of the losses. Exchange rate movements added $88.8 billion to Canada’s net foreign asset position as the value of foreign currency-denominated assets increased. Nearly all of Canada’s international assets, 97.1 per cent, were held in foreign currencies, compared with 35.7 per cent of liabilities.
Canada’s net foreign asset position with the United States declined by $120.5 billion to $1.26 trillion. The position with countries outside the United States fell by $190.3 billion to $96.9 billion, the lowest level since the third quarter of 2022.
Canada’s international assets totalled $11.29 trillion at the end of March, down $44.8 billion from the previous quarter. Market losses reduced the value of foreign holdings, particularly U.S. shares. Canadian investors continued to purchase foreign assets during the quarter, helping limit the overall decline.
International liabilities rose by $266 billion, or 2.8 per cent, to $9.93 trillion. Higher market valuations, foreign borrowing and exchange rate movements all contributed to the increase.
Foreign investors purchased Canadian bonds at a record pace during the quarter, helping drive a $55.1-billion increase in borrowing from abroad.
Canada’s gross external debt, which measures Canadian debt instruments held by foreign investors, rose by $60.8 billion to $4.84 trillion. The debt represented 145.7 per cent of gross domestic product, up slightly from the previous quarter.
The increase was concentrated in the financial sector, led by Canadian chartered banks issuing bonds in foreign markets. Financial institutions accounted for 59.6 per cent of Canada’s gross external debt at the end of the quarter.
Government sector external debt increased by $26 billion to $949.6 billion, marking a 10th consecutive quarterly increase. Government external debt has doubled since the end of 2019.