BANKERS SUPPORT FRANC

Press, Volume CVIII, Issue 31841, 20 November 1968, Page 17

BANKERS SUPPORT FRANC

(N.Z.P.A.-Reuter —Copyright) PARIS, Nov. 19. Bankers believe the battered French franc may win a muchneeded breathing space today after promises of unrestricted international support and a cutback of inflationary Government spending.

The Prime Minister Mr 1 Maurice Couve de Murville announced the spending cuts in a televised interview last ’ night and also told viewers that promises of unrestricted support for the franc were made by central bankers at their meeting in Basle over the week-end. He gave no details of the i proposed cuts —though expect (the proposed 1969 Budget de-1 licit to be reduced by about jl2 per cent roughly £l3om |(sterling)— but the broadcast should nevertheless give I French savers and foreign investors fresh confidence. Though the proposed cuts and promised support offer no immediate practical relief, ' bankers believe the psycholo- : gieal impact should lead to a tapering off in the speculation that has given the franc its worstbattering in the exchange markets during a decade of Gaullist rule. Mr Couve de Murville said:

'“All the assistance France ‘would or will need in the future, will be provided to her without any reservation.” He also told the nation he would urge the National As.‘sembly today to prepare for wide-ranging public expendi-

ture cuts through amendments to the 1969 draft Budget. “We must display our willingness to re-establish economic equilibrium as quickly as I possible,” he said. Nationalised industry would be a prime target, he said, and economic experts believe that foreign aid and defence programmes must also be in! the front line of the deflation- 1 ary cut-backs. Speculation against the! franc and towards the mark! 'in the hope of a West German; revaluation have kept the! franc firmly nailed to its low-

est permitted level in exchange markets over the last few days. Immediately after the broadcast the franc improved on the New York exchange and the rate against the dollar moved up 0.1 per cent to 20.1025 cents from 20.0825.

France’s working population | —which four months ago (gained major wage concessions I after the strikes—will be uni touched in immediate materI ial terms by the announced I promises and proposals.

But the Frenchman's anxiety about the threat to the

international value of his money will be relieved. On television the Prime Minister stressed the positive aspects of the economy, in spite of the strike setbacks.

“The rhythm of industrial production has caught up with and even outstripped the levels prior to the spring crisis,” Mr Couve de Murville said.

“Unemployment is levelling off,” he said.

“Exports are buoyant and order books full . . . and prices are under control."