Support for sterling cost a fortune
(N.Z.P.A -Reuter—Copyright) LONDON. The cost of supporting sterling has reduced Britain’s monetary reserves to their lowest level in nearly five years, the Treasury reported.
The Treasury said that in April Britain’s reserves of gold and foreign currency fall by SUSIOS7m, only slightly less than the decline Of SUSI 119 m in March. The reserves now stand at BUS4B4Bm, one-quarter less than the SUS7O2Sm at the end of February.
The figures show the heavy cost to Britain of the run on sterling in world money markets that began in early March. The Bank of England has been selling dollars and other currencies, while buying sterling, to try to steady the pound’s exchange rate since it slumped below SUS2.
To help make good the loss, the Labour Government will draw a SUSBOOm stand-by credit from the International Monetary Fund' in Washington. The credit was sought last November and approved by the I.M.F. executive board bn December 31, together with a drawing of about SUSI 100 m for Britain under the I.M.F.’s special oil facility — designed to help countries in balance of payments difficulties because of higher oil prices.
The benefits of both these IMF. credits have been consumed by the recent support activities for sterling, and some financial commentators believe Britain may have to seek further I.M.F. help Ster in the year to prevent e reserves falling to dangerously low levels.
The Labour Government is soon hoping to announce an agreement with the unions on the next stage of a vol-
untary anti-inflation pay policy, and it believes this will provide an overdue boost for sterling on exchange markets.
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Bibliographic details
Press, Volume CXVI, Issue 34146, 6 May 1976, Page 21
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273Support for sterling cost a fortune Press, Volume CXVI, Issue 34146, 6 May 1976, Page 21
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