A security issued by a US governement-sponsored agency to provide financial assistance to specific groups of people, such as students or new home buyers.

Examples of organizations issuing agency securities include the Student Loan Marketing Association (Sallie Mae), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). While the government sponsors these organizations, it does not strictly guarantee the securities they issue. These assets are usually exempt from state and local but not federal taxes.

FX Significance

Transfers of wealth from public to private hands that allow people greater purchasing power serve to improve private consumption which in turn is the largest contributor to GDP growth. All things being equal, this will be positively reflected in the currency exchange rate.