BUS101: Introduction to Business

The New York Fed, representing the Federal Reserve System and the U.S. Treasury, also is responsible for intervening in foreign exchange markets to achieve dollar exchange rate policy objectives and to counter disorderly conditions in foreign exchange markets. Such transactions are made in close coordination with the U.S. Treasury and Board of Governors, and most often are coordinated with the foreign exchange operations of other central banks. Dollars are sold in exchange for foreign currency if the goal is to counter upward pressure on the dollar. If the objective is to counter downward pressure, dollars are purchased through the sale of foreign currency.

Another responsibility of the New York Fed is to act as the primary contact with other foreign central banks. The services provided for these institutions include the receipt and payment of funds in U.S. dollars; purchase and sale of foreign exchange and Treasury securities; and the storage of monetary gold.