Federal Reserve and U.S. Treasury Did Not Intervene in FX Markets During Q2

Strategic Insights -

The Federal Reserve Bank of New York announced that the Federal Reserve and U.S. Treasury did not intervene in foreign exchange markets during the second quarter of 2025. This comes as the U.S. dollar depreciated 5.6 percent in Q2, with a cumulative depreciation of 7.5 percent since the beginning of the year. Market contacts attributed the dollar's depreciation to downward revisions to the U.S. growth outlook and heightened uncertainty.

Key Takeaways:

  • The Federal Reserve and U.S. Treasury did not intervene in foreign exchange markets during the second quarter of 2025.
  • The U.S. dollar depreciated 5.6 percent in Q2 2025 and has a cumulative depreciation of 7.5 percent since the beginning of the year.
  • The dollar's depreciation was driven by downward revisions to the U.S. growth outlook and heightened uncertainty.
  • Market participants cited increases in foreign investors' FX hedge ratios on U.S. dollar assets as a contributing factor to the dollar's depreciation.
  • The dollar depreciated against all advanced-economies and most emerging-market currencies in the second quarter.
  • On a bilateral basis, the dollar depreciated 8.2 percent against the euro and 4 percent against the Japanese yen.
  • Roberto Perli, the Federal Open Market Committee's manager for the System Open Market Account, presented the report on behalf of the Treasury and the Federal Reserve System.

Statistics:

  • The U.S. dollar depreciated 5.6 percent in Q2 2025.
  • The dollar's cumulative depreciation since the beginning of the year is 7.5 percent.
  • The dollar depreciated 8.2 percent against the euro in Q2 2025.
  • The dollar depreciated 4 percent against the Japanese yen in Q2 2025.
  • The broad trade-weighted dollar index depreciated against all advanced-economies and most emerging-market currencies in the second quarter.

Sources:

  • Federal Reserve Bank of New York, "The Federal Reserve and U.S. Treasury Did Not Intervene in FX Markets During the Second Quarter," August 14, 2025.