CURRENCY REPORT

Press, 23 August 1976, Page 14

CURRENCY REPORT

The European market last week suffered the most severe currency tension since February/March, when the Spanish pesata. and the French franc left the joint float, and sterling fell below $2 value, says the Bank of New South Wales in its weekly foreign exchange report.

Repeated German denials that a realignment of the float was imminent did little to prevent a surge of speculative pressure which kept weaker currencies pinned against their float floors, and depressed several European currencies outside the float.

The mark and yen advanced strongly, while every member country of the float engaged in intervention to defend the system.

Some stability returned late in the week when the unrest showed signs of subsiding. High short term Eurocurrency interest rates in the guilder and Belgium franc helped lift those currencies off their joint float floors against the mark. The French franc, which earlier had reached the five franc level for the first time since February, 1974, steadied in anticipation of a ‘Government economic package which is expected to include possible modification of exchange control.

Gold continued its declining trend, and at least two bullion houses were predicting a further price decline — possibly to as low as SUSIOS per ounce.