STERLING GOES UP.

Auckland Star, Volume LXVI, Issue 163, 12 July 1935, Page 6

STERLING GOES UP.

A few "weeks ago the pound was rising in Paris. Now it is steady there, but is fluttering in. New York. The reason tor the 1 aiis movement was plain to everyone; speculation was rampant, and the Government was in a turmoil. But the New York movement is puzzling. It has been attributed to Italy's efforts to finance her military activities and to American purchased of silver. Both these influences iare in the same direction; they increase the demand for sterling, and they have come at a time when sterling is already in request by foreign visitors to London. The Jubilee celebrations stimulated the tourist traffic beyond all expectations, money ed, and the pound rose. To-day it is 12 cents higher in New York than when .the Jubilee began. This is the highest point touched since last November, and the rise is not in sterling only, but the principal gold currencies of Europe and of the Empire have moved up in line. What really appears to have happened is. that they have been lifted up by the sheer strength of sterling and by the operation of the British Exchange Equalisation Fund. A movement of these dimensions over so vast an area, and in so short a time, is remarkable. What has been the attitude of the American, currency controllers in the meantime? They have their equalisation fund, which has been much tised since it was created nearly two years ago, but secrecy is preserved. However, Britain is believed to be using her fund to keep sterling in a steady relation to Continental currencies. The Government's declared intention is not to use the exchange fund to hold the currency rigid, but to smooth out movements, to cushion sudden blows and to counter the activities of speculators. When the franc was dropping, the fall was beyond the capacity of the fund to stop it. Now the dollar has been affected not by a ripple, but by a tidal wave. This, of course, is upsetting to trade, but it cannot escape notice that prices within Britain remain surprisingly steady. Such rises as we see in butter and ; wool have nothing to do with the exchanges, they are due to the market position. TV holesale I prices are slowly feeling their way towards a new balance, and this trend will continue side by side with the halting moves towards a new I stability for currencies.