MONEY MARKET.

Auckland Star, Volume LXVIII, Issue 30, 5 February 1937, Page 4

MONEY MARKET.

RESERVE BANK RETURN.

STATE DEPOSITS FALL. I INCREASE IX EXCHANGE. (By Telegraph.—Press Association.) WELLIXGTOX, Thursday. The Reserve Bank return for the week ended Monday, February 1. was gazetted to-night. The statement is balanced at £32,080,174, or £75,129 more than at the close of the previous -.veek. An increase of £315,541 in the deposits of trading banks is the principal movement of liabilities. Government deposits are £193.422 lower. The contraction of the note issue continues, with a fall of £49.530 for the week covered by the return. The sterling exchange reserve shows the substantial rise of £867.543 for the week. Subsidiary coin is £6716 higher in value. Advances to Dairy Industry Account have fallen bv £136.627. while there has been a decrease of £706.800 in the investment item. Other assets are £44,297 higher. The statement with variations compared with the week before is as follows:— LIABILITIES. Variation. £ £ 1. Gen. reserve .. 1.500.000 Same 2. Bank notes . . 13,018,862 -—19,530 3. Demand liabilities : (a) State 4,846,102 —193.422 (b) Banks .. 12,202,827 +315,541 (c) Other ... 376,512 —9.186 6. Other liabilities 144,871 +11.720 Total 32,089,174 +75,129 ASSETS. £ £ 7. Reserve : (a) Gold ... 2,801,790 Same (b) Sterling ex. 18,769.537 +567.543 8. Subsidiary coin 101,190 +6,716 10. Advances: 1. Dairy Industry Account . . 5,973,071 —136,627 2. For other purposes . 1,800.000 Same 11. Investment ... 2,453,050 —706,800 13. Other assets . 130,536 +44,297 Total 32,089,174 +75,129 Proportion of reserve to notes and other demand liabilities, 70.855 per cent (68.147 last week). Three Years Compared. The following table shows the position of the bank's funds at this time for the past three years (in thousands of pounds):— LIABILITIES. 1935. 1930. 1937. .£ £ £ Capital 500 500 —■ General reserve .... 1,000 1,000 1,500 Bank notes 9,502 10,075 13,019 Demand liabilities : State 8,563 4,662 4.546 Bank 7,434 10.187 12,203 Other 6 167 376 Other liabilities .... 50 128 145 Total 27,055 26,720 32,089 ASSETS. Reserve : Gold 3,002 2,802 2,802 Sterling 21,848 21,919 18,769 Subsidiary coin . 189 196 161 Advances to State or State undertakings : (1) Dairy Industry Account — — 5,973 (2) For other purposes - —• — I,SOO Investments 1,992 1,776 2,453 Other assets 24' 28 130 Total 27,055 26,720 32,089 Proportion of reserve •. to notes and other demand liabilities. 97.43 98.518 70.855 The-tiiscount rate is 2 per cent, but the late is purely nominal, as the bank has not so far engaged in the business of discounting bills. Capital was added to general reserve under provisions of the Reserve Bank of Xew Zealand Amendment Act, 1936. The bank started business on August 1, 1934. The item "advances to State or State undertakings," subdivided into two classes, first appeared on- August 17 last. The first, which cover#' the dairy industry,. ; rapidly 'iißtil the week eridjsd - Nlfttehtjbfer 9. when a slight fall vvs» recorded'. Since then there have been weekly fluctuations. ' The balance of this loan item designated as. "for all other purposes" was stationary at £700,000 until Xovember 30, after which: it was increased, first to £800,000 and later to £1,800,000. The holding of sterling exchange at £18,709,537 is over. £3,000,000 less than at this .time last year, but a compensating item is "advances to the dairy industry" £5,973,000, which in the ordinary course will become an addition to the exchange funds. This is also a factor in the apparent decrease in the proportion of reserves to liabilities. BANK OF ENGLAND RETURNS. (Received 11.30 a.111.) LONDOX, January 28. The Bank of England returns for the week ended January 27, compared with those of last week and a year ago. are as follow (in million pounds sterling):— ISSUE DEPARTMENT. Tear Feb. 3. Jan. 27. ago. £ £ £ Notes issued— In circulation .... 457.3 452.3 399.8 In banking dept.. . 56.4 61.4 00.7 Other Govt, securities 187.9 188.0 245.7 Other securities .... 1.1 1.0 2.2 Silver coin — — 1.1 Gold coin and bullion 313.7 313.7 200.5 BANKING DEPARTMENT. Rest 3.6 3.6 3.6 Deposits— Public 12.2 12.2 11.0 Bankers' 90.1 08.4 102.9 Other accounts . . 38.3 38.4 37.0 Government securities 80.4 75.6 79.4 i Discounts, advances. 8.5 8.0 14.4 I Other securities ... . 18.9 • 18.7 13.9 Notes and coin 56.9 61.8 61.3 Proportion 38.78 41.45 40.66