Competitive Exchange Rate Act of 1985

(Reported to House from the Committee on Banking, Finance and Urban affairs with amendment, H. Rept. 99-456)

Competitive Exchange Rate Act of 1985 - Makes achievement of a competitive exchange rate for the dollar a top priority of the United States in international economic negotiations.

Directs the President to seek to negotiate with other countries through an international conference in order to: (1) review the existing international exchange rate system; (2) develop an agenda for reform of that system to provide for long-term exchange rate stability; and (3) recommend proposals for better coordination of macroeconomic policies of the major industrialized nations and greater stability in trade, current account balances, and the exchange rates.

Requires the Secretary of the Treasury to establish a Strategic Currency Reserve, consisting of assets denominated in foreign currencies purchased through intervention in the exchange markets, to be used as part of a coordinated international strategy to achieve competitive exchange markets, to be used as part of a coordinated international strategy to achieve competitive exchange rates for the dollar and other currencies and exchange rate stability. Directs the Secretary, in coordination with other countries to the extent possible, to purchase and sell foreign currencies at appropriate times to offset speculative movements of the dollar away from its competitive exchange rate or to assist the gradual movement of the dollar toward a competitive exchange rate.

Requires the Secretary to submit to the House Committee on Banking, Finance and Urban Affairs and the Senate Committee on Banking, Housing, and Urban Affairs a biannual report on: (1) the changes in the exchange rate required to balance the U.S. merchandise trade account and the current account; (2) the effects on production, employment, and international competitive performance of U.S. manufacturing, agricultural, and mining industries when the dollar exceeds the exchange rate level consistent with either merchandise trade or current account balance; (3) the conditions that cause the actual exchange rate of the dollar to exceed the competitive exchange rate; (4) recommendations for changing U.S. economic policy to attain a sustainable current account balance; (5) any International Monetary Fund recommendation for changes in U.S. policies and an explanation of the Secretary's plans to implement or ignore such recommendations; (6) progress by the Secretary and any other Government employee in adjusting the actual exchange rate of the dollar toward its competitive exchange rate and in reforming the international exchange rate system to reduce instability and disequilibrium in exchange rates; (7) the Secretary's objectives and the obstacles concerning domestic economic policies that are consistent with achieving current account balance, intervention in exchange markets, and negotiations with other countries on exchange rate system reform together with the reasons for any lack of progress in such negotiations; (8) the impact of currency transactions under this Act on foreign exchange markets; and (9) the extent to which the actual exchange rate of each country with which the United States has substantial bilateral trade competition or bilateral capital flows differs from that country's competitive exchange rate level and the trends and policies affecting that country's exchange rate and international capital flows. Directs each Committee to consult with the Secretary and report to its House on the Secretary's intended policies.

Directs the Secretary to transmit to the Congress all official U.S. documents submitted to the International Monetary Fund in the course of any requested consultation with the United States and all Fund documents arising from that consultation.