Among the main developments:
- Trade imbalances among the major industrial countries were little changed in the third quarter, although the US current account deficit narrowed fairly sharply as exchange rate valuation effects boosted investment income.
- Overall activity in the international capital markets rose in the fourth quarter, reflecting continuing strength in the syndicated credits market and some recovery in issues of fixed-rate bonds and arrangements of euronote facilities after a weak third quarter.
- Developments in the foreign exchange markets in the fourth quarter were strongly influenced by events in Eastern Europe-which were seen as highly favourable to West Germany's economic prospects, so stimulating inflows of funds into the deutschemark, which rose by 9,1/2% against the dollar and by almost 5% in effective terms over the period.
International financial developments