The Federal Reserve Did Not Intervene in FX Markets During the Third Quarter; The U.S. Treasury Purchased Japanese Yen in FX Markets During the Same Period

The Federal Reserve did not intervene in foreign exchange markets during the July - September 2026 quarter, while the U.S. Treasury purchased Japanese yen in the foreign exchange markets over the period, 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, was little changed on net, with moves in the dollar being broadly consistent with changes in front-end U.S.-advanced foreign economy (AFE) interest rate differentials, which also ended the quarter little changed on net despite notable intra-quarter shifts.

Early in the quarter, U.S.-AFE interest rate differentials narrowed amid resilient foreign macroeconomic data and a perceived rise in upside global inflation risks related to higher energy prices stemming from a re-escalation of the Middle East conflict, which drove broad dollar depreciation. These dynamics reversed later in the quarter, as stronger-than-expected U.S. economic data and communications from Federal Reserve officials led to an upward repricing of the Federal Reserve's path of policy.

Over the quarter, the dollar's performance was mixed on a bilateral basis. The dollar's depreciation against Asian currencies such as the Korean won, Japanese yen, and Chinese renminbi was largely offset by appreciation against currencies such as the euro and Mexican peso.

This report, presented by Roberto Perli, Federal Reserve Bank of New York, System Open Market Account Manager for the Federal Open Market Committee, describes the foreign exchange operations of the New York Fed for the period from July through September 2026. The New York Fed conducts foreign exchange transactions for the System Open Market Account, as directed by the Federal Open Market Committee, and, as directed by the U.S. Treasury, in its capacity as fiscal agent of the United States.

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