International Finance:

Recent Developments in Foreign Exchange Markets

GGD-93-154: Published: Sep 24, 1993. Publicly Released: Oct 15, 1993.

Additional Materials:


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO reviewed emerging issues in foreign currency exchange markets, focusing on: (1) developments in the foreign exchange market; (2) the economics of foreign exchange rate determinations; (3) the role of speculation in foreign exchange trading; (4) the efficacy of government intervention to influence exchange rates; and (5) the European Exchange Rate Mechanism (ERM) crisis in September 1992.

GAO found that: (1) the foreign exchange market has significantly changed over the past decade and become more complex; (2) there is no definitive explanation of what determines short-term exchange rate movements; (3) over the long term, fundamental forces in national economies such as interest rates, inflation rates, current account balances, international capital flows, and economic growth rates determine exchange rates; (4) while speculation and risk are important to the efficient functioning of financial markets, they are always areas of concern to policymakers; (5) the government's exchange rate policy must consider market forces in order to set realistic objectives; and (6) government intervention can influence only short-term exchange rate movements.

Oct 2, 2020

Sep 22, 2020

Sep 15, 2020

Sep 14, 2020

Aug 27, 2020

Jul 28, 2020

Jun 18, 2020

Jun 9, 2020

May 12, 2020

Looking for more? Browse all our products here