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Economic Commentary

Should the United States Hold Foreign Currency Reserves?

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The United States holds a $43 billion portfolio of foreign exchange reserves— mostly German marks and Japanese yen — to defend against unwanted depreciations of the dollar in the world’s currency markets. By selling these reserves when demand for its currency weakens, the United States can reduce the supply of dollars and thereby resist a decline in the dollar’s foreign exchange price.

08.01.1992EC 8/1/1992

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit clevelandfed.org for updates.

Suggested Citation

Anderson, Gerald, and Owen F. Humpage. 1992. “Should the United States Hold Foreign Currency Reserves?” Federal Reserve Bank of Cleveland, Economic Commentary 8/1/1992.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International