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Economic Viewpoint

Pension Funds Bringing Home the Bacon?

May 21, 2025
Mirza Shaheryar Baig
Foreign Exchange Strategist

Canada’s pension funds manage around CAD3.6 trillion, most of which is invested in foreign assets. Pension funds have a sizable exposure to the US dollar through unhedged positions in US assets. However, the greenback seems to have lost its safe haven appeal. If pension funds raise their hedge ratios even marginally, the loonie would significantly outperform its traditional drivers like interest rate differentials. Perhaps this has already begun.

This report was originally published on May 5, 2025.

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