RECOVERY OF STERLING

Press, Volume XC, Issue 27340, 4 May 1954, Page 11

RECOVERY OF STERLING

“Back To Old Stand”

(NX. Press Association—Copyright) (Rec. 11.30 p.m.) NEW YORK, May 3.

The British £ sterling, the historic trade money of the modern world, is “back again at the; old stand” after years of reduced prestige caused by war, says a report in the “New York Times” today.

Virtually all types of British money figuring in international exchange are now selling within the official trading range of from 2.78 dollars to 2.42 dollars maintained for American-account sterling by the Bank of England. The official exchange parity is 2.80 dollars to the £.

“With the rate bid up in the market to 2.82 dollars the British authorities are selling sterling heavily in exchange for American dollars,” the report says. “Trade and foreign exchange interests that for years were chary of involvment with British money, are taking on commitments without restraint. Now that sterling trade balances of limited spendability are selling within the trading range of official American-account sterling, major commercial banks are for the first time arranging deals in British money not transferable to the American-account.”

Although not convertible officially into American dollars or other “hard currencies,” these restricted balances—known as “transferable account sterling”—can be spent freely anywhere in the British Commonwealth, except Canada, and in most of Europe, Asia, Africa and South Amercia, the report says. As consquence, “transferable sterling” is now selling in the open market for dollars at the rate of 2.791 to the £ sterling, a discount of about 1 per cent, from the £ that is transferable to the American account. Three years ago, transferable sterling was valued at 2.36 dollars. British banknotes, which once sold in tionBritish markets at as little as 2.35 dollars to the £, are now valued at 2.77 dollars.

For all practical purposes. British money is again “convertible” in most parts of the world, the report says. The big remaining restriction on the international transfer of British money lies in the prohibition against the transferring - of sterling balances out of the. sterling area. To persons or trade interests in most of the Commonwealth nations, this is a formidable restraint.