CURRENCY REPORT Sterling falls to new low

Press, Volume CXVI, Issue 34120, 5 April 1976, Page 20

CURRENCY REPORT Sterling falls to new low

The pound sterling hit a new low on European money markets last week, dropping to its worst-ever over-all depreciation, and a record low, against the U.S. dollar.

On Friday, the pound was worth 35.3 per cent less than in December, 1971 — when compared with other key currencies. It lost 1.2 per cent of its value in one day as widespread selling sent it crashing. Concern abroad about strikes in the car industry, the future of the Government’s anti-inflation pay curbs, and uncertainty about who will succeed Mr Harold Wilson as the new British Prime Minister next Monday apparently all contributed to the slump. The British currency fell by 3jc against the U.S. dollar. hitting a low of $1.8645 before recovering to close at $1.8837. The pound's trade depreciation against the German mark since three years ago rose higher than 50 per cent as the pound closed at only 4.72 marks. Against other strong European currencies sterling closed at 5.05 dutch

guilders and 4.76 Swiss francs.

Senior bankers reported that sterling sales came from a range of centres but they could not identify any specific sales through London from oil-exporting countries as the primary cause of sterling’s retreat. The Bank of England may have spent between ssom and sloom in moderately supporting its currency in the early trading, but it later stayed out of the market. Dealers believed foreign disenchantment with Britain’s economic situation had affected sterling at a time of fresh movements into "strong” European currencies, in case monetary realignments emerge from the current meeting of Common Market heads of Government in Luxemburg. British Leyland, the Stateowned car manufacturer, is threatened with a total stoppage because of strikes. Two strikes were settled on Friday involving 350 Triumph toolmakers at Coventry and 650 press operators at a components factory in Llanelli, South Wales. But three walkouts remain unsettled. Earlier in the week conditions on European currencymarkets were calm — with the mark remaining as the dominant member of the Euopean joint float, and the Belgian franc once again at the bottom of the float after speculative operations.

The lire suffered a decline owing to large scale lire liquidation in Switzerland, and concern over Italian unions’ possible rejection of wage control proposals. Gold closed at $129.55 after previously touching a two-month low of $129.00.