From BNN
Ottawa is not reducing its direct financial exposure to the risks of the United Kingdom potentially voting to leave the European Union.
Canada’s federal government had US$6.14 billion worth of British pounds in its global currency reserves as of the end of May. With the British currency holding near a five-month high in the days leading up to Thursday’s U.K.-wide referendum on the question of remaining in or leaving the EU, federal Finance Minister Bill Morneau indicated that he would not be taking action based on any short-term volatility.
“As we manage our reserves in Canada, we have a long-term perspective on those reserves,” Morneau said in response to questioning from BNN on Thursday. “So as we look at volatility or periodic flows, we look out to the long-term, and don’t believe this is an issue of concern.”
Investors and financial experts have long warned the pound would likely decline in value quickly and significantly if the vote results in favour of the U.K. leaving the EU. George Soros, famed for successfully betting against the British pound in 1992, said earlier this week the downside currency risk was far greater this time around.
