Among the main developments:
- The US current account deficit widened again in the first quarter, as did the German surplus: more recent data suggest that some adjustment in the trade imbalance in Germany has taken place. Little further progress was apparent in Japan in thefirst quarter, although the surplus has fallen back more recently. The short-run effects of dollar strength may be partly responsible for recent encouraging movements.
- Overall financing activity in the primary international capital markets fell back in the second quarter, reflecting a lower volume of straight fixed-rate bond issues - in part on account of rising interest rates - and a reduction in arrangements of new syndicated credit facilities from their exceptionally high first quarter level.
- In the foreign exchange markets, the US dollar strengthened further for much of the second quarter, but fell back sharply in the final two weeks of the period as expectations of an easing of us monetary policy became more widespread: over the quarter as a whole it appreciated by 4,1/2% in effective terms.