CURRENCY REPORT Recovery by sterling, but tone weak

Press, Volume CXII, Issue 33066, 6 November 1972, Page 22

CURRENCY REPORT Recovery by sterling, but tone weak

Sterling recovered 328 points of its recent losses last week, and closed on Thursday at $U52.3528, according to the weekly foreign exchange report supplied by the Bank of New South Wales on Friday.

After its relatively large intervention on Friday week ago the Bank of England was not thought to have intervened actively, and sterling’s improvement was partly attributed to small operators purchasing sterling to cover oversold positions, but the possibility of a prices and incomes policy if the triparite talks break down was not excluded. After some sharp fluctuations during the earlier part of the week, spot sterling was contained on Thursday within the relatively narrow margin of $2.3500 to $2.3560. The low point was struck after the announcement that the United Kingdom’s foreign currency reserves fell during October by s23om to $5859m. This fall was anticipated, in view of the support given to the pound by the Bank of England last week. The German discount rate has been raised from 3} per cent to 4 per cent, and the Lombard rate from 5 per cent to 6 per cent. The French bank rate has also been increased from 5} per cent to 6| per cent. This discount on three months forward sterling is 2.65 per cent. Overnight Eurodollar deposits averaged 4 7/8 per cent.

years, 7} per cent; and five years, 7 5/8 per cent. The latest cross rates to the dollar for main currencies are:—Deutschmarks 3.2006-11; commercial French francs 5.0180-0220; financial French francs 5.0075-0125; Swiss francs 3.7962-69; Japanese yen 300.10-25; and Dutch guilders 3.2265-75. Gold was $64.05 at the first fixing, and $64.00 at the second.

Term Eurodollar deposits are:—One month 5 1/16 per cent; two months 5 15/16 per cent; three months 6 per cent, four months, 6 1/16 per cent; five months, 6| per cent; six months, 6 5/16 per cent; one year, 6 5/8 per cent; two years, 7 1/16 per cent; three