No. 2096

February 7, 1996

NO U.S. INTERVENTION IN FOREIGN EXCHANGE MARKETS
DURING OCTOBER-DECEMBER 1995 QUARTER

NEW YORK -- The U.S. monetary authorities did not intervene in the foreign exchange markets in the final quarter of 1995, the Federal Reserve Bank of New York reported today. The dollar appreciated modestly during the period, with trading activity declining towards year end.

Over the course of the final calendar quarter, the dollar strengthened 3.7 percent against the Japanese yen and 0.5 percent against the German mark, according to the quarterly report, which is presented to Congress. The dollar rose 0.6 percent on a trade-weighted basis against an index of the currencies of the group of G-10 nations, the report said.

In other related foreign exchange operations during the period, the U.S. Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve System each received repayments of $350 million in October from Mexico on their respective short-term swap arrangements with that nation. The swap arrangements were renewed for an additional 90 days at the end of October, the report said.

The report was presented by Peter R. Fisher, executive vice president of the New York Fed and the Federal Open Market Committee's manager for the system open market account, on behalf of the Treasury and the Federal Reserve System. It described the market environment during the quarter as one that saw reduced risk-taking, with countervailing political and economic developments in the U.S. and overseas helping to keep the dollar in relatively narrow trading ranges against the yen and mark.

At the end of the quarter, the current values of the German mark and Japanese yen reserve holdings of the Federal Reserve and the ESF were $20.5 billion and $17.0 billion respectively.