U.S. Monetary Authorities Did Not Intervene in FX Markets During the First Quarter
May 12, 2016

NEW YORK—The U.S. monetary authorities did not intervene in the foreign exchange markets during the first quarter of 2016, the Federal Reserve Bank of New York said today in its quarterly report to the U.S. Congress.

During the first quarter of 2016, the U.S. dollar depreciated roughly 2.9 percent as measured by the Federal Reserve Board’s broad trade-weighted index. At the start of the year, the dollar was supported by safe-haven flows owing to global growth uncertainty, commodity price declines, and shifts in the Chinese exchange rate regime that led to a sharp decline in risk asset prices into early February. Later in the quarter, the dollar depreciated as some of these concerns moderated and markets priced in a slower pace of U.S. monetary policy tightening. On net over the course of the quarter, the dollar depreciated against almost all major and emerging market currencies. The euro and yen appreciated against the dollar amid the shift in expectations on U.S. monetary policy, despite the introduction of additional policy accommodation measures by both the European Central Bank and the Bank of Japan. The Chinese renminbi was relatively unchanged on net against the dollar over the quarter, while most other emerging market currencies strengthened alongside the shift in expectations for U.S. monetary policy, higher commodity prices, and improved risk sentiment in global equity markets.

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.

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