BID TO TAKE HEAT OFF DEUTSCHMARK

Press, Volume CIX, Issue 31985, 12 May 1969, Page 13

BID TO TAKE HEAT OFF DEUTSCHMARK

(N.Z.P.A.-Reuter—Copyright)

BASLE, May 11.

The central bankers of the West are meeting in Basle this week-end to tackle ways of reversing the massive inflow of funds which swamped West Germany in the last two weeks, when speculators hoped for a quick profit from a snap increase in the value of the Deutschmark.

European central banking sources believe that after the Bonn Government’s decisive “no” to revaluation, some of the “hot” money, reported to total more/ than SUS3OOOm will leave the country again; and that other funds will flow out because some operators will be unable to maintain their speculative positions beyond the week-end. The main problem facing the bankers meeting in Basle —they have come from Western Europe, the United States, Canada and Japan—will be how to control the outflow and what measures can be taken to expedite it

The key man at the meeting is Dr Karl Blessing, president of the German Federal Bank, who said on his arrival in Basle yesterday that he could not say what course the talks might take; he would have to wait and see what decisions his colleagues made on ways of pumping the “hot” money out of West Germany and back to where it came from. The discussions will be made more difficult by the failure of the West German Government to announce what concrete steps it is taking to reinforce its determination not to revalue. It is hoped that Dr Blessing will be able to brief his fel-low-bankers on the measures under consideration in Bonn. This should aid the bankers to find ways of taking the heat off the Deutschmark without putting other, less-robust currencies under pressure. It is not clear whether the usually-taciturn members of

the “Basle Club” will break their traditional silence, but financial observers feel that a firm declaration, coming on top of the Bonn announcement, could help to calm the money markets on Monday. “Not A Trick” Meanwhile, a senior West German official said that the Government’s decision against upward revaluation of the Deutschmark was not “a trick.” Mr Klaus von Dohnanyi, Secretary of State at the Ministry of Economics, speaking at a business fair in Cologne, said the refusal to revalue showed that the speculators had miscalculated. His statement, obviously meant for sceptical foreign exchange operators, was in response to an editorial in a Cologne newspaper, suggesting that the Government’s announcement was “only a manoeuvre to gain time.”