LONDON MONEY MARKET.

Auckland Star, Volume LXIII, Issue 234, 3 October 1932, Page 4

LONDON MONEY MARKET.

REMOVAL OF LOAN EMBARGO, EFFECT ON AUSTRALIA. (Received 9.30 a.m.") LONDON, October 2. The announcement of the final figures in the British War Loan conversion operation is regarded as highly satisfactory, but it has had little effect on the London Stock Exchange as the success had been fully anticipated. On the strength of this expectation all gilt-edged stocks had been steadily hardening. There are some profit-taking sales of British funds by operators who want money to subscribe to new capital issues, of which a plentiful crop is expected now that the embargo has been removed. The most remarkable feature recently has been the wonderful advance of Australian Government stocks to levels which a few months ago would have been regarded as absolutely unattainable. Commonwealth 5 per cents actually touched £107 yesterday, though the middle price was about £106 5/. At this figure its yield to investors works out at about 494 per cent. This is indeed a striking testimony to the recovery of Australia's credit. Commenting on cablegrams suggesting that Australia will be keenly disappointed if the rate of its conversion loan exceeds 4 per cent, the "Economist" says:—lt is not unreasonable to ask the Australian taxpayer to bear in mind, firstly, that although the measure of Australia's recovery in the past 12 months has been striking, the British holder of her securities has a lively recollection of his very recent anxieties over the extreme depreciation of Commonwealth stocks; and, considering that Australia's export surplus was only achieved by the abnormal process of forcibly reducing her imports, he must ask himself whether the restoration of Australia's equilibrium can be taken as permanently assured until there is a further recovery in the price of her staple exports.

Secondly, the embargo on new capital in the market has given Australia a specially favoured position in regard to her present refinancing. In view of the magnitude of later conversions which Australia hopes to carry out, it is imperative that the initial operation should be a complete success, and that there should he no risk of it being placed at a figure which either would prove unacceptable or, if the operation just "went through," would Ipad to subsequent depreciation of the stook.

BANK OF ENGLAND.

THE FIDUCIARY ISSUE. LONDON, Octobcr 1. A Gazette issued this evening announces the maintenance until December 31 of the fiduciary issue of the Bank of England at £275,000,000, to which level it was raised from £200,000,000 ia August, 123 L