NEW YORK (AP) _ Continued stability of the dollar kept the government from intervening in foreign-exchange markets for the fourth consecutive quarter, its longest absence in 14 years, the Federal Reserve Bank of New York said.

The United States last entered the currency market in August 1995 to help boost the dollar from post-war lows. The last time it sat out at least four straight quarters was the period of April 1981 to June 1982, the Fed said in a report on Thursday.

When the U.S. intervenes to support the dollar, it buys the U.S. currency in the open market, often in a coordinated effort with allies.

Explaining the lack of interventions in the quarter ended Sept. 30, Fed executive vice president Peter Fisher said there has been an extended period of relative stability in foreign-exchange markets and the U.S. economy.

During the latest quarter, the dollar rose about 1.6 percent against the Japanese yen and 0.1 percent against the German mark, a marginal climb compared with a year ago when the dollar advanced 17.6 percent against the yen and 3.3 percent against the mark in a recovery from post-World War II lows.

But overall, the U.S. currency fared better than last year, hitting a 29-month high of 111.19 yen on July 8 before retreating somewhat, the Fed said.

In the current quarter, not covered by Thursday's report, the dollar resumed its climb. It flirted with 115 yen this week, trading at levels last seen in April 1993.

Fueling some of the dollar's rise this past quarter were expectations that the Federal Reserve would raise interest rates to help slow the U.S. economy, the Fed said. Higher interest rates make dollar-denominated holdings more attractive.

However, that was tempered by Fed Chairman Alan Greenspan's testimony to Congress in July, which indicated the economy may slow in the second half of the year and left traders wary of a rate hike, the Fed said.

In addition, the dollar was also lifted by new confidence of broad participation in the European Monetary Union, which will create a single European currency, the Fed said.

All told, U.S. holdings of foreign currencies at the end of the third quarter of 1996 were $19.4 billion and the Treasury's Exchange Stabilization Fund was $15.9 billion, compared with $19.5 billion and $16.04 billion respectively in the previous quarter.

Also during the quarter, Mexico repaid $7 billion to the Treasury and still owes $3.5 billion.

The United States provided $12.5 billion in emergency loans to Mexico last year after a bungled peso devaluation in December 1994 brought the country close to insolvency.