Treasury And Federal Reserve Foreign Exchange Operations: Interim Report (February-April 1983)

• Published in: Federal reserve bulletin Vol. 69; no. 6; p. 404
• Main Author: Cross, Sam Y
• Format: Journal Article
• Language: English
• Published: Washington Board of Governors of the Federal Reserve System 01-06-1983
• Subjects: Currencies; Economic conditions; Federal Reserve monetary policy; Foreign exchange markets; Statistical data
• ISSN: 0014-9209; 1944-8910

From February through April 1983, the exchange rate relationships within the European Monetary System (EMS) suffered a major speculative attack. The dollar generally held steady against most currencies. This performance was firmer than expected, due to the more promising US economic outlook, low inflation, and downturns in long-term interest rates. The German mark strengthened against the dollar and European currencies. As speculation against the French and Belgian francs became prohibitively expensive, sales of non-EMS currencies, including the dollar, increased. The dollar rose about one percent by the end of April, only slightly lower than the November 1982 high. US credits to Mexico and Brazil continued during the period. At the same time, both countries repaid other borrowings to the US. In the period, exchange transactions resulted in no profits or losses to the Federal Reserve or to the US Treasury. Foreign currency balances have been invested in a variety of high-quality, high-yield investments.