No. 2118

AUGUST 7, 1996

TREASURY, FEDERAL RESERVE DO NOT INTERVENE IN FX MARKET DURING SECOND QUARTER

NEW YORK -- U.S. monetary authorities did not intervene in the foreign exchange market during the April-June quarter. The dollar traded in a relatively narrow range, according to a report by the Federal Reserve Bank of New York that was presented to Congress today.

In the second quarter, the dollar appreciated 3.2 percent against the German mark and 2.2 percent against the Japanese yen. On a trade-weighted basis, the dollar advanced 1.6 percent against the other G-10 nations' currencies, the report noted.

Throughout most of the quarter, the report said, a perception of underlying economic strength in the U.S.and expectations of an eventual increase in interest rates by the Federal Reserve supported the dollar.

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.