FINANCE TALKS U.S. compromise reported
(N.Z. Press Association—Copyright) ROME, November 30. The United States offered a compromise package to its major overseas trading partners yesterday as a possible move toward solving the worst international monetary crisis since World War 11, the Associated Press reported.
Conference sources said that the plan was presented by Mr Paul Volcker, the United States Treasury Under-Secretary for Monetary Affairs, at a meeting of the non-Communist world’s richest nations, the Group of Ten.
The sources, with access to the discussions, said the plan called for an upward revaluation of currencies by America’s trading partners averaging 11 per cent in return for an end to the 10 per cent United States import surcharge President Nixon ordered on August 15.
There was no immediate reaction from other nations on the plan. Mr Volcker spoke at a meeting of deputy delegation chiefs arranging the agenda for a conference of finance minister today and tomorrow. The deputies agreed to make no statement on their talks.
Mr Volcker himself refused all comment.
For one thing, any premature disclosure of the actual exchange rates envisaged in the American plan could set off huge speculation in the worlds financial centres. Well-informed sources said however, that the American plan called for the highest revaluation by the Japanese yen and correspondingly smaller ones for other leading currencies. Not devaluation A French delegation source said last night that America’s proposals to yesterday’s Group of Ten deputies’ meeting contained nothing different from usual—an indication that a United States dollar devaluation was not included.
There were grounds for cautious optimism, however, that the three-month-old crisis caused by President Nixon’s measures to defend
the United States dollar may be nearing a'solution.
A final solution to the complicated problems involved is not expected to emerge from this weeks meeting in Rome. However, they could lay the basis for agreement during scheduled talks next month between President Nixon and other Western leaders. Developing nations The Associated Press reported from Geneva, that a realignment of international currencies should be coupled with special provisions to soften the impact on developing countries, the Secretariat of the United Nations Conference on Trade and Development (U.N.C.T.A.D.) suggested. The report urges that a reform of the international monetary system give more prominence to the needs of the developing countries than did the 1944 Bretton Woods agreement. It also said there was an opportunity for Communist countries “to be associated with the building of the new structure.” The document, released today after the Group of Ten meeting began in Rome, was prepared for a conference of U.N.C.TJLD.’s committee on invisibles and financing. Value of reserves “Developing countries stand to lose from currency realignments even if such realignments do not result in a slow-down of world trade," the report said. It noted that an U.N.C.T.A.D. survey showed the recent depreciation of the United States dollar reduced the real value of reserves held by 19 developing countries by more than SUS4OO million.
“If the sample is typical of developing countries as a whole, the total losses in reserves would amount to SUS9SO million, the report added. An increase in the United States dollar price of gold would not offset these losses, according to the report, because, by the end of 1970, gold accounted for only 18 per cent of the developing countries’ reserves, compared with about 50 per cent for the industrialised nations. Gold dearer Speculators kept hands off the United States dollar yesterday, but the price of gold neared a record.
With foreign exchange dealers reporting a “wait-and-see” attitude among speculators, the dollar showed little change on European markets.
The average upward revaluation of the world’s currencies in relation to the dollar was 4.9 per cent, ranging from 2.1 per cent for the Spanish peseta to 10.1 for the Japanese yen, and 10.6 per cent for the West German mark. On the London market, gold rose 20 United States cents to 5U543.65 an ounce. This was the highest level since the two-tier system was introduced in March, 1968, except for August 9 this year before President Nixon announced his economic measures to protect the United States dollar.
Permanent link to this item
https://paperspast.natlib.govt.nz/newspapers/CHP19711201.2.92
Bibliographic details
Press, Volume CXI, Issue 32778, 1 December 1971, Page 17
Word Count
688FINANCE TALKS U.S. compromise reported Press, Volume CXI, Issue 32778, 1 December 1971, Page 17
Using This Item
Stuff Ltd is the copyright owner for the Press. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons BY-NC-SA 3.0 New Zealand licence. This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.
Acknowledgements
This newspaper was digitised in partnership with Christchurch City Libraries.