What was the likely reaction of foreign exchange market

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Reference no: EM131501131

On November 28, 1990, Federal Reserve Chairman Alan Greenspan told the House Banking Committee that despite possible benefits to the U.S. trade balance, "a weaker dollar also is a cause for concern." This statement departed from what happened to be an attitude of benign neglect by U.S. monetary officials toward the dollar's depreciation. He also rejected the notion that the Fed dhould aggressively ease monetary policy, as some Treasury officials had been arguing. At the same time, Mr. Greenspan did not mention foreign market intervention to support the dollar's value.

a. What was the likely reaction of the foreign exchange market to Mr. Greenspan's statement?

b. Explain with a graph

Reference no: EM131501131

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