Competitive Exchange Rate Act of 1985

Strategic Capital Reserve Act of 1985 - Establishes in the Treasury a Strategic Capital Reserve (Reserve). Makes such reserve available to the Board of Governors of the Federal Reserve System and the Secretary of the Treasury for purchases and sales of foreign currencies.

Requires the Board and the Secretary to purchase foreign currencies, in a specified amount, during any fiscal quarter when: (1) the current account deficit has exceeded one and one-half percent of the gross national product for the most recent four consecutive quarters; and (2) the trade-weighted exchange rate of the dollar is 15 percent or more above the equilibrium rate (that rate which would be required to bring the current account into balance).

Authorizes the Board and the Secretary to sell currencies from the Reserve in order to prevent sudden and disruptive drops in the value of the dollar or to calm disorderly markets. Provides that such authority may not be exercised to counteract or offset gradual, orderly declines in the value of the dollar resulting from purchases of foreign currencies.

Requires the Board to disregard any purchase of currency authorized under this Act in the formulation and conduct of monetary policy.

Requires the Board and the Secretary to consult at least quarterly with the central banks of the Federal Republic of Germany, Japan, the United Kingdom, and France in order to coordinate foreign exchange operations.

Requires the Board and the Secretary to report annually to the Congress on the impact of currency transactions under this Act on foreign exchange markets.

Requires the President to enter into negotiations with the governments of the Group of Ten countries to establish an international financial commission to carry out a study and report to each of the Group of Ten countries on measures to reduce capital flow imbalances and volitility in capital flows caused by the macro-economic policies of major trading countries.