Government Procedures for Buying Some Foreign Currencies

ID-79-17: Published: Aug 9, 1979. Publicly Released: Aug 9, 1979.

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Each year the U.S. Government buys about $5.5 billion worth of foreign currencies for operating expenses in other countries which must be paid in local currencies and for nonappropriated fund activites, such as the post exchange system. A review was made of Government procedures for purchasing the foreign currencies to see if the most favorable exchange rates were being obtained.

With few exceptions, currencies were being obtained at competitive exchange rates and existing arrangements were effective. However, some instances were noted where the State Department was buying currencies at rates less favorable than the official rate. For other than a few selected currencies, such as those used for large defense purposes, it did not seem advantageous to have Government agencies obtain their foreign currency needs through the Federal Reserve Bank. It is probable that the State Department could obtain somewhat more favorable rates for Japanese yen if its requirements were purchased under the same arrangements as those prevailing for Defense Department foreign operations.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of the Treasury in cooperation with the Secretaries of State and Defense should obtain all requirements for yen through the method that provides the more beneficial exchange rate. The Secretary should also, in cooperation with the Secretary of State, review arrangements for insuring that foreign currencies with official fixed conversion rates in relation to the dollar be purchased at rates no less favorable than official rates or determine reasons why this may not be done.

    Agency Affected:


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