Competitive Exchange Rate Act of 1985

Competitive Exchange Rate Act of 1985 - Requires the President to establish the United States Commission on Exchange Rate Reform. Directs the Commission to: (1) propose reforms in the international exchange rate system to correct exchange rate misalignments, align the actual exchange rate of the dollar with its competitive rate, and achieve long-term stability in exchange rates; (2) propose changes in domestic economic policy to complement other efforts to align the actual exchange rate of the dollar with its competitive rate; (3) recommend procedures for achieving better international coordination of fiscal, monetary, and savings and investment policies; (4) prepare an agenda for an international conference and negotiations on exchange rate reform; (5) develop objectives for coordinated interventions in foreign exchange markets by appropriate agencies of the major industrialized countries; (6) develop a method for calculating the competitive exchange rate of the dollar; and (7) report all such proposals to the President and specified congressional committees within six months. Terminates the Commission 30 days after it submits such report.

Makes achievement of a competitive exchange rate for the dollar a top priority of the United States in international economic negotiations.

Directs the President, as soon as practicable after the Commission submits its report, 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 exchange rate equilibrium and a competitive exchange rate for the dollar. Directs the Secretary, in coordination with central banks of key countries, to purchase and sell foreign currencies from the Reserve 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 change 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 current account balance; (5) any International Monetary Fund recommendations 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) an assessment of the relationship of such objectives to the Commission's proposals; (9) the impact of currency transactions under this Act on foreign exchange markets; and (10) 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.