CURRENCY REPORT Sterling 6% below par on Thursday

Press, Volume CXII, Issue 32958, 3 July 1972, Page 16

CURRENCY REPORT Sterling 6% below par on Thursday

On Thursday spot sterling fluctuated between §2.4700 and $2.4592; this represents a devaluation range from 5.2 to almost 6 per cent.

Sterling fluctuated widely all week, according to the weekly report on foreign exchange dealings from the Bank of New South Wales.

On resumption of London foreign exchange dealings—on Tuesday—the pound closed at $2.5050, a devaluation of 3.86 per cent compared with the official par value of $2.60571.

Trading conditions were highly active, although the amounts dealt in tended to be relatively small. On Wednesday spot sterling continued to float downwards on the foreign exchange closing at $2.4850 for a loss of 200 points on the day; this represented an effective devaluation against the United States dollar of more than 4| per cent. Trading activity in London was less hectic than on Tuesday, but the market remained very nervous, one of the main reasons for this uncertainty being the contradictory statements issued by officials of the Swiss National Bank concerning sales of that bank’s dollar holdings.

In the event the National Bank allowed the Swiss franc to float all day, and adopted a “wait and see” policy. The effect was that the United States dollar (already below its Swiss francs floor) continued to slide, and closed at $3.7250, 2J centimes below its floor.

The Italian lira required considerable support to keep it within the 21 per cent currency margins against other E.E.C. currencies. There was little sign of any heavy pressure on the dollar in West Germany as operators appeared to be holding back in anticipation of tougher German exchange controls. The United States dollar closed only a few points above its floor against the mark, guilder and French and Belgian franc. The Governor of the Bank of Japan said on Wednesday that the yen would not be revalued again, at least not before the end of this year. The discount on three months forward sterling is 3.22 per cent Overnight Eurodollar de-

posits averaged 4 1/8 per cent.

Term Eurodollar deposits are:—one month 4) per cent; two months 5 1/16 per cent; three months 5 3/8 per cent; four months 5 9/16 per cent; five months 5 5/8 per cent; six months 5 7/8 per cent; one year 6 3/16 per cent; two years 6 7/8 per cent; three years 7 3/8 per cent; and five years 7 7/8 per cent.

The latest cross rates to the dollar for main currencies are: — Deutschmarks 3.1605-20; financial French francs 4.73 | 74 V, commerial French francs 5.00 80 0120; Swiss francs 3.741/-75; Japanese yen 299 J-300; and Dutch guilders 3.1730-60. Gold was $65.10 at the first fixing and $64.50 at the second.