CONFIDENTIAL (FR) CLASS II-FOMC

Material for Staff Presentation to the Federal Open Market Committee

‘Tnternational Financial Trends
February 4, 1980

Chart 1

CONFIDENTIAL (FR) Class I - FOMC [

THE - U.S.

DOLLAR AND RELATIVE CONSUMER PRICES Reiatixe Consumer Prices
Foreign /US

March 1973 =I00

-

- 110 - 100
-

- 90

r

*Weighfed average against G-10 Countries plus Switzerland using t o U 1972-76 average trade

Of

these Countries.

,
CONFIDENTIAL (FR)

Chart 2

class n .FOMC

7

- 125
- 100

GERMANY

-

-

-

75

1

I

I

I

I

I

FAPAN
Relative Prices

1
125 100 75

-

I

I

I

I

I

I

I

I

WITZERLAND
Relative Prices

1
Exchange Rate

-

I

I

I

UNITED KINGDOM
-

125

100

1
1973 1975 1977 1979
*Consumer prices, except for Japan where wholesale prices are used for Japan and the United Stales.

75

Chart 3

CONFIDENTIAL IFR) Class H. FOMC

WEIGHTED AVERAGE EXCHANGE VALUE OF THE U.S. DOLLAR

March 1973=100
110

100

90

1973

1975

1977

1979

3-MONTH INTEREST RATES

r

Percent per annurn

1
- 13
9

5

I
1973

I
1975

I

I
1977

I

I
1979

I

INTEREST RATE AND INFLATION DIFFERENTIALS Minus Foreign

7.
t-

Percent per annurn

1
- 4

Interest

+
0

Consumer Price Inflation Differential
- 4

I
1973

I
1975

I

I
1977

I

I
1979

I

I

CONFIDENTIAL IFR)

Chart 4

Class II . FOMC

GERMAN MARK/U.S. DOLLAR EXCHANGE RATE

March 1973=100

1
100

1 1973

I

I
1975

I

I

1977

I

I

1979

I

I
I
- 8

80

60

r

3-MONTH INTEREST RATES

Percent per annum

1

I

1973

I

I

1975

I

I

1977

I

I

1979

I

-

Consumer Price

- 4

Differential

- 4

+
0 -

Chart 5

CONFIDENTIAL (FR) Class U. FOMC

URRENCY COMPOSITION OF FOREIGN EXCHANGE RESERVES* -

Percent

Other

1

1973

1975

1977

1979

:URRENCY COMPOSITION OF EUROCURRENCY LIABILITIES** Other

Percent

90

70

1973

1975

1977
reported regularly to the IMF

% Reserves Of 76 countries. excluding reserve Centers and countties that h-Ot
**Exciudiig
liabilities in ottshore banking centers

CONFIDENTIAL IFR)

Chart 6

c i ~ nFOMC -

WEIGHTED AVERAGE EXCHANGE VALUE OF THE U.S. DOLLAR

March 1973=100

1

r
-

NET OFFICIAL DOLLAR PURCHASES*

-

rn U.S.

Foreign

T

7

Billions of dollars

I40
-

-

20

+
0 -

ULI
20

NET FOREIGN OFFICIAL DOLLAR PURCHASES*

r

Billions of dollars

f

II]Germany
Japan

Othar

-X G.I o countries pius ~witzeiiano
AnP.ua rate

CONFIDENTIAL IFR)

Chart 7

Class II - FOMC

- CURRENT ACCOUNT BALANCE S.
harterly

Seasonally adjusted, annui billions of (

-

te, rs

20

10

+
0 10

20

'EIGHTED AVERAGE EXCHANGE VALUE OF THE U.S. DOLLAR Monthly

March 19

I0

15

30

95

90

85

I
1973

I
1975

1

I
1977

I

I
1979

I

I
198

CONFIDENTIAL (FR)

Chart 0

Class II. FOMC

Seasonally adjusted, annual rate, billions of dollars

F
L
-

Net Investment Income
\----*
c-

-**& 36

Net Reinvested Earl... ~

Q S

f-f

24

12

Balance on Nonagricultural Exports and Non-oil Imports

, /

*--.
- 20

/ / / /

+ 0
- 20

-

I

I

I

I

I

I

I

I

r

Seasonally adjusted, annual te, billions of 1972 do rs

-

1
I

Volume of Nonagricultural Exports

p'_-----70
60

50

I

I

I

I

I

I

I
-

-

'' * ' . -'

--

-

65

55

45

I
1973

I
1975

I

I
1977

I

I
1979

I

I
1981

CONFIDENTIAL (FR)

Chart 9

Class IL - FOMC

OIL IMPORT BILLS
Ratio scale, annual rate, billions of'6

I0

,.-' 8
0 '

/--

1 0

8

4 '

Western World

1 0

.

/*
00

--------

10

**

60

40

20

10

I
1973

I
1975

I

I
1977

I

I
1979

I

I
1981

6

CONFIDENTIAL (FR) Class I I - FOMC
iaaie I
GLOBAL CURRENT ACCOUNT BALANCES

Balances on Goods, Services, Private and Official Transfers; Billions of Dollars Staff Project -_ion

I

I973
I _

I974
I _

I975 -18.3

I

I976
4.6

I977 -14.I -10.7 30.0

I978 I 979e - ----13.5
22.6
-1.0

1980 __
-3%

I _

1981

I. United States
2. Other OECD

7. I

4.3 -31.4 70.0 -24.2 -9.5

18%

3.0

-18.7 31.0 -32.0 -18.5

-22.8

32.5

-58% -49

3 OPEC . 4. Non-oil Develop,,ig
Cou ntr ies

8.0
-7. I -3.5

37.0 -20.2 -13.0

7.0

65.0

113

9 1 -61
-13

-14.5
-8.5

-25.7 -39.0 -9.5
11.0

-58 -12

5. Other-I /

I/

Principally Sino-Soviet area and East European countries.

e = estimate

Chart 10

CONFIDENTIAL (FR) Class II .FOMC

FINANCIAL FLOWS OF NON-OIL DEVELOPING COUNTRIES
OFFICIAL FLOWS

r
t

Billions of dollars

1
1 3 0
20 10

1973

1975

1977

1979

r

BANK LOANS, Net Increase

1
30
20

10

1973

1975

1977

1979

CONFIDENTIAL (FR) Class I I - FOMC Table II EXTERNAL DEBT OF NON-OI L DEVELOP1NG COUNTRIES Billions of Dollars

I973 I1 Total Debt21 of which to banksU. S. banks' share
I00

_ I

1974 I40 44

I975 I70

1976
200

1977 230 99 48% 52%

1978 285 I22 42% 58%

I

1979e 350 I55 39% 61%

28

63 54% 46%

8 1

54% 46%

57% 43%

52% 48%

Foreign banks' share

-I I

Public long-term debt reported by the World Bank plus staff estimates of private long-term debt and short -term debt of developing countries other than offshore banking centers.

21 Foreign claims of banking offices in major industrial countries and U. S. bank branches in offshore banking centers.
e = estimate

CONFIDENTIAL (FR)

Chart 1 1

class n - FOMC

U.S. BANK CLAIMS ON NON-OIL DEVELOPING COUNTRIES

r

TOTAL CLAIMS -

Ratio scale, billions oi

115

60

50 40

30

20

15

10

1973

1975

1977

1979

RELATIVE TO ASSETS AND CAPITAL*
Percent

-

I

Ble

I .a

I .4

1.o

I
1973

I
1975

I

I
1977

I

I
1979

.6

Chart 12

CONFIDENTIAL (FR) Class II - FOMC

CURRENT ACCOUNT DEFICITS OF IN-OIL DEVELOPING COUNTRIES -

Billions of dollars

1

AVAILABLE IMF RESOURCES

r

Beginning of Year
BO

60

40
General Arrangements to Borrow (GAB)

-

20

1973

1975

1977

1979

1981

RESERVES OF NON-OIL DEVELOPING COUNTRIES

r

Beginning of Year

tnln
1973