THE FEDERAL RESERVE DID NOT INTERVENE IN FX MARKETS DURING THE FOURTH QUARTER; THE U.S. TREASURY INTERVENED DURING THE SAME PERIOD

The following information was released by the Federal Reserve Bank of New York:

The Federal Reserve did not intervene in foreign exchange markets during the October December 2025 quarter, while the U.S. Treasury intervened in 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 Boards broad trade-weighted dollar index, depreciated 0.4 percent in Q4 2025, bringing cumulative dollar depreciation in 2025 to 7.2 percent. The U.S. dollars move in the fourth quarter was driven primarily by depreciation against emerging market currencies, while advanced economy currencies were little changed against the dollar, with the exception of the Japanese yen. The dollars modest depreciation occurred amid a slight narrowing in interest rate differentials between the U.S. and the rest of the world and evolving expectations for the near-term path of Federal Reserve policy as communications were seen as indicating greater focus on downside risks to the labor market and potentially more easing in 2026.

On a bilateral basis, the Mexican peso and Chinese renminbi made the largest contributions to the trade-weighted dollars depreciation, while the dollar appreciated significantly against the Japanese yen.

This report, presented by Roberto Perli, Federal Reserve Bank of New York System Open Market Account Manager, describes the foreign exchange operations of the New York Fed for the period from October through December 2025. 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.