Speculation On U.S. Devaluation

Press, Volume CVIII, Issue 31627, 13 March 1968, Page 18

Speculation On U.S. Devaluation

CNew Zealand Press Association)

WANGANUI, March 12.

Devaluation of the United States dollar was considered a likely prospect among international speculators, the London manager of the Bank of New Zealand (Mr H. M. Buchanan) said yesterday.

If this happened, sterling, as the world’s other key reserve currency, could suffer “a

reflex action,” Mr Buchanan said.

“But it would surprise me if there was a second devaluation of sterling unilaterally.

Devaluation Agreement

“The last one was achieved through the co-operation of the European central bankers and 15 per cent was the figure agreed on as sufficient to give Britain the benefits of devaluation.”

Mr Buchanan described the world’s present financial crisis as “psychological warfare of international speculators.” He said the United States today was facing a serious balance of payments problem, largely because of the Vietnam war. “Lack of confidence in paper currencies has brought the whole monetary system within focus. Striving For Stability “The Central European bankers are striving to obtain stability before developing further the international units of account spoken of by the International Monetary Fund. These are to substitute for the dollar and sterling as key reserve currencies. “They will in effect be a new world currency equivalent to the drawing rights of different countries at the I.M F. and will be of an amount sufficient to finance expansion in world trade.” Burden Removed Describing this scheme as the optimum, Mr Buchanan said: “It will take away the burden of reserve currencies from Britain and the United States. “The group of 10 central bankers are doing their utmost to get the system settled down again and, by international co-operation, endeavour to defeat pressures brought on by speculators.”

UNIT TRUSTS

Buy Sell 1st Dominion- ... 43 — 2nd Dominion . < ,.51 — 1st N.Z, Unit . - ,. 59 84 N.Z. Incom 41 45 N.Z. Accum. .. >. 78 82 Sec. First .. ,. 90 95 Investors .. 43 47