Treasury and Federal Reserve foreign exchange operations - May - July 1990

• Published in: Quarterly review - Federal Reserve Bank of New York Vol. 15; no. 2; p. 83
• Main Author: Cross, Sam Y
• Format: Journal Article
• Language: English
• Published: New York Federal Reserve Bank of New York 01-07-1990
• Subjects: Currency; Federal Reserve monetary policy; Foreign exchange controls; Interest rates; International; Reciprocal; Statistical data; US
• ISSN: 0147-6580

During the reporting period May-July 1990, the dollar generally declines. At the beginning of May, the easier tone for the dollar largely reflected improving sentiment toward other currencies, particularly the mark and yen. By late June, the focus began to shift to the dollar. Sentiment toward the dollar deteriorated in the midst of talk about: 1. a worsening US fiscal deficit, 2. a weakening domestic economy, and 3. possible declines in US interest rates in an environment of rising worldwide demand for capital. At the end of July, the dollar had declined more than 8% against the yen and 5.5% against the mark. The decline in the dollar against the mark for this period approached the previous postwar low. Against the sterling, the dollar declined 12%. During the final 2 weeks of the period, the dollar declined by a modest amount as interest rate and financial market developments further reduced the attractiveness of dollar investments. During the period, no operations aimed at influencing the level of the dollar were carried out.