Canadian investors continued to reduce their holdings of foreign debt at the same time as non-residents shed Canadian securities, Statistics Canada said Monday.

In December, Canadian investors divested themselves of $6.4 billion worth of foreign securities. That’s the fourth month that Canadians have reduced their holdings of foreign securities, returning funds to the Canadian economy.

Non-residents reduced their investment in Canadian securities in December by $2.8 billion,

This activity resulted in the largest quarterly reduction in non-resident holdings of Canadian bonds since the third quarter of 2003, StatsCan said.

“Non-resident investors did however acquire an unprecedented $4.9 billion of Canadian short-term paper in December, following strong purchases in November,” StatsCan said.

Last year marked the first annual divestment in foreign bonds since 1994, with Canadians shedding $16.4 billion in foreign bonds in 2008. Three-quarters of that was divestments in United States government bonds.

The U.S. dollar rose 23% against the Canadian dollar in 2008, while Canadian rates gained ground over U.S. rates in the second half of the year, making Canadian bonds relatively more attractive than their U.S. counterparts, said Statistics Canada.

IE