Overall, the international value of the dollar has changed little over the last month, despite the fact that both short-term and long-term interest rates have fallen more in the U.S. than in most industrialized countries. Market observers attribute the strengthening of the dollar against the yen to disappointment about the prospects for Japanese monetary tightening. This in turn is related to the perception that the new Japanese government is less likely to soften the existing proposals for fiscal contraction.
Suggested citation: “International Developments,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-12, pp. 18-19, 12.01.1996.