Press Release

The Federal Reserve and U.S. Treasury Did Not Intervene in FX Markets During the Fourth Quarter

February 14, 2019

NEW YORK – The Federal Reserve and U.S. Treasury did not intervene in foreign exchange markets during the October – December 2018 quarter, the Federal Reserve Bank of New York said today in its quarterly report to the U.S. Congress.

The U.S. dollar, as measured by the Federal Reserve Board’s broad trade-weighted dollar index, appreciated 1.8 percent in the fourth quarter of 2018, amid numerous cross-currents. The dollar’s modest appreciation occurred despite a notable decline in U.S. Treasury yields—partly attributed to the net lowering of expectations regarding the future path of the target range for the federal funds rate—and the resultant narrowing of U.S. interest rate differentials vis-à-vis other major economies. The dominant force supporting dollar appreciation was a sharp global sell-off in risk assets precipitated by rising concerns about future corporate earnings as well as concerns about broader global growth amid ongoing global trade tensions. Among major currencies, the dollar appreciated 1.2 percent against the euro and 5.6 percent against the Canadian dollar. By contrast, the dollar depreciated 3.5 percent against the Japanese yen amid the decline in risk sentiment. The dollar was little changed on net against the Chinese renminbi, despite notable intraquarter volatility.

The report was presented by Simon Potter, executive vice president of the Federal Reserve Bank of New York and the Federal Open Market Committee’s manager for the System Open Market Account, on behalf of the Treasury and the Federal Reserve System.

The full report is available on the New York Fed’s website.

Suzanne Elio
(212) 720-6449
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