FALL OF THE FRANC.

Auckland Star, Volume LXVIII, Issue 235, 4 October 1937, Page 4

FALL OF THE FRANC.

LOWEST POINT IN HISTORY. In spite of the efforts of the new French Government the fall in the franc has continued and at the close of the week it reached the lowest point on record— 151% francs to the pound sterling.

Exchange control through the stabilisation fund has been intermittent, owing to inadequate supplies of gold for the purpose, and since about the middle of July, when the sterling exchange rate fell below 130 francs for the first time, the declining tendency has persisted.

Selling pressure has continued to affect the market in spite of the efforts of the new Government to balance the Budget by economies in various directions and new tax decrees.

The underlying cause of the depreciation of the franc, according to a recent issue of the "Economist," was the rise in internal costs. Wage increases and the 40-hour five-day week made a fresh alignment of the franc essential. Depreciation was necessary to balance rising costs and when the measures of social reform have taken full effect the franc should find a new point of equilibrium.

The history of the franc since the opening of this century has been an erratic one. Before the' war it was considered at the equivalent of the English shilling and was worth about lOd. Like all European currencies it depreciated in wartime and after the war was stabilised at about 2%d. Now it is worth just under l%d, the lowest yet.