Among the main developments:
- Both the US current account deficit and the Japanese surplus fell in the second quarter to their lowest levels for two years: latest monthly data suggest, however, that the pace of adjustment has slowed. The German current account surplus rose sharply in the second quarter.
- Activity in the international capital markets remained buoyant in the third quarter, with issuer and investor confidence continuing to improve, helped by greater stability in foreign exchange markets. There was a marked recovery in the euronote sector, offsetting a decline in fixed-rate bond issuance .
- In the foreign exchange market, the US dollar remained in strong demand throughout July and early August and, although weakening somewhat thereafter in generally quiet market conditions, ended the quarter on a steadier note, having risen 2% in effective terms over the period.
International financial developments