British Reserves Went Up 231m Dollars In March

Press, Volume XCVII, Issue 28553, 5 April 1958, Page 13

British Reserves Went Up 231m Dollars In March

(N.Z. Press, Association —Copyright)

(Rec. 7 p.m.) LONDON, April 3. Britain’s gain of 231 m dollars in gold and dollar reserves during March was the second biggest for any month since October, 1950, according to Reuter’s financial editor. The biggest, gain was in October, 1957, when Britain had a loan of 250 m dollars from the Washington Export-Import Bank/ Eight million dollars was repaid during March on a Canadian loan.

The surplus of £sm in the European Payments Union was regarded as normal. The exceptional surplus of £4sm in February. was swollen by special purchases of sterling by the Royal Dutch Petroleum Company. Allowing for these exceptional factors, the gain in March was 156 m dollars. This was less than the abnormal gain of 208 m dollars for February, but compared favourably with the gains of 166 m dollars for January, 86m dollars for December, 72m dollars for November, and 141 m dollars for October. Commenting on yesterday’s Treasury announcement, “The Times” financial editor, said: “The remarkable narrowing of the trade gap in January and February has no doubt been a growing' factor in recent weeks, quite apart from the seasonal rise in certain commodity earnings.” “Slight Disappointment” “The only slight disappointment is the size of ,the surplus with E.P.U. last month at £sm. “But since the balance with E.P U. includes payments with virtually the whole of the nondollar world, it is quite , impossible either to analyse it or even perhaps to expect what was once a seasonal pattern to emerge.” The financial editor of the "Daily Telegraoh” said that the rise of 231 m dollars made a favourable impression on an already strong gilt-edged market, and also provoked favourable reactions in the foreign exchanges. "Although to some extent the March surplus was probably helped by the inflow of mobile funds to London, and also had the benefit of seasonal influences, last month’s gain in the reserves can be fairly attributed in large measure to a sound balance of payments position and to increasing confidence in the £ abroad,” he said. Bank Rate The -“Financial Times” said in a leading article that if the £ remained strong for another one or two months a further reduction in bank rate, even perhaps of a full point, would certainly be a possibility "The fact that the reserves improvement has occurred in a seasonally favourable period must limit its influence on Budget calculations Even so. sharply rising reserves and some growth in unemployment could well set the scene/ for at least a modestly favourable Budget, although the still /Unsettled wage position is bedevilling the outlook. "It is right to recognise that the present trend of the reserves is really good news. We should not be too cautious to admit it.”