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International Developments

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The dollar has strengthened against both the German mark and the Japanese yen over the last month. Evidence of weak economic growth in Germany and elsewhere in Europe has led market observers to anticipate further European interest rate cuts, which would be expected to pull funds into U.S. dollar assets. Though Japanese economic growth has picked up, unexpected weakness in the Japanese trade surplus may be partly responsible for the increase in the yen-dollar rate, just as a worsening U.S. trade balance might move the dollar lower.

Suggested citation: “International Developments,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-02, pp. 18, 02.01.1996.

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