Canada’s net liability to foreigners increased 11.1% in the July-September period, largely because of the stronger Canadian dollar, Statistics Canada reported Thursday.

The net external liability – the difference between external assets and liabilities – had hit a two-decade low in the second quarter but expanded by $17.2 billion in the third quarter to $170.4 billion.

The appreciation of the currency cut $46.3 billion from the estimated value of Canada’s international assets in Canadian dollars.

Statistics Canada explained that most of Canada’s foreign assets are denominated in foreign currencies and shrink in Canadian-dollar terms when the currency is rising. Less than half of the country’s international liabilities are in foreign currencies.

The value of international assets declined by $5.6 billion during the summer quarter to $1,001.1 billion, the agency said. The $46.3-billion impact of the loonie – which during the quarter gained 5.4% against the U.S. dollar, 6.2% against the euro and 7.9% against the yen – offset all net transactions.

At the same time, international liabilities increased by $11.6 billion to $1,171.4 billion. The strengthening dollar trimmed this deficit by $22.3 billion, but net transactions of $38.2 billion more than offset this effect.

As a result, net external liabilities represented 12.3% of gross domestic product at the end of the third quarter, up from 11.4% three months previously.

Canadian holdings of foreign equities declined by $6.6 billion to $179.1 billion, the lowest level since the end of 2000, as the strongest outflow of investment in nearly four years into rising foreign stock markets failed to overcome the impact of the exchange rate.

Foreign direct investment in Canada rose $15.1 billion to $390 billion at the end of September, the biggest quarterly increase in five years, and foreign holdings of Canadian stocks increased $2.7 billion to a record $112 billion.

Canada’s international reserves ended the quarter at $38.5 billion, the lowest level since the third quarter of 1999.