May 15, 2025
NEW YORK—The Federal Reserve and U.S. Treasury did not intervene in foreign exchange markets during the January – March 2025 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, depreciated 2 percent in Q1 2025, partially retracing its notable appreciation in the last quarter of 2024. The dollar’s depreciation was driven by a narrowing in interest rate differentials between the U.S. and the rest of the world, a downward shift in the outlook for U.S. growth relative to the rest of the world and particularly Europe, and a rise in uncertainty related to new U.S. trade policies. On net over the period, these factors contributed to lower Treasury yields while the Federal Reserve’s path of policy was mostly unchanged.
The dollar depreciated against most advanced economy and emerging market currencies in the first quarter. On a bilateral basis, the dollar depreciated 4.3 percent against the euro, accounting for almost half of the overall broad dollar move, and 4.6 percent against the Japanese yen.
The report was presented by Roberto Perli, 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.
Contact
Connor Munsch
(347) 224-1175
Connor.Munsch@ny.frb.org
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