SPECULATION IN EXCHANGE.

Auckland Star, Volume LV, Issue 305, 24 December 1924, Page 6

SPECULATION IN EXCHANGE.

INTEREST RATES. LONDON, December 11. The feature of the week has been the improvement in sterling. The fact that there has been a persistent advance while the cotton crops are moving shows that investment and speculation are contributing heavily towards the change, but It clearly points to a revival of American confidence in Europe's economic recovery. The incentive to invest in sterling for the sake of exchange profits diminishes, however, with the rise, of the pound towards parity. Therefore the influx of American capital is bound to slacken, though heavy withdrawals are unlikely while our interest rates continue heavier than those ruling in the United States. There is always the danger that when the Americans withdraw they wiU withdraw altogether, which would mean a collapse of sterling and a consequent return to embarrassment and uncertainty in international trade. This danger could be averted if steps were taken to effect a final return to the gold standard. Many financial authorities believe that the moment is ripe to take these steps. GUt-edged securities are weaker, and the industrial market inclined to weakness, due to lack of support. Tea issues remain in favour, and rubbers are in demand. Little business is being done in oils, which are weak.. Textiles are quiet, and iron and steel active. Argentine freights have hardened. Australian are quiet. The export of British motor cars continues to improve. It Is clear that the trade is increasing, due partly to the attempt of the British motor makers to meet overseas conditions-