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April 1979

Did Discount Rate Changes Affect the Foreign Exchange Value of the Dollar During 1978?

by Douglas R. Mudd

This article examines, in a relatively non-technical fashion, the announcement effect of discount rate changes on the foreign exchange value of the dollar in 1978. Despite the reported purposes of these discount rate increases, there does not appear to have been a general, significant announcement effect of discount rate changes on foreign exchange markets.