The three-months period to end-November has been marked by two important international policy initiatives - the agreement by the Finance Ministers and central bank Governors of the Group of Five (G5) countries, aimed at redressing the large and growing external imbalances that have developed between some major industrial countries, and the proposal by US Treasury Secretary Baker for fresh efforts to resolve the debt and adjustment problems of a number of less developed countries. The G5 agreement and action taken in furtherance of its aims have had a rapid and substantial impact in the foreign exchange markets, with all major currencies appreciating strongly against the US dollar. By the end of the period, the dollar had depreciated by a little over 8% in effective terms from its end-August level and by about 18% from its February peak.
International financial developments