CURRENCY REPORT

Press, 29 November 1976, Page 22

CURRENCY REPORT

The following is the diary kept by the foreign exchange department of the Bank of New South Wales for last week: November 18: Sterling fell almost 1c on previous closing rates to close at $1.6585 as profit taking and commercial liquidation removed an earlier firmness. The Bank of France was reported selling U.S. dollars to steady the French franc, with the market nervous ahead of French October trade data. November 19: Sterling closed at $1.67875, a rise of 2c on the previous closing rates, reflecting the introduction of exchange controls effectively ending sterling’s role in the international financing of trade between third countries. The French franc steadied against the U.S. dollar on postion-closing after easing over the last, two days. November 22: The U.S. dollar and sterling declined broadly in Europe’s currency centres, apparently triggering central bank intervention in some centres to check the two currencies’ fall. A fresh bout of U.S. prime rate reductions and a U.S. discount rate cut to 5.25 per cent triggered immediate dollar sales, which were intensified by New York City’s latest financial uncertainties. The weakness of the U.S. unit worked to unsettle sterling, which fell almost 3c at one stage before steadying to close at $1.6470. November 23: Trading in sterling and the U.S. dollar throughout Europe was unsettled, and both currencies moved erratically in a thin market. In early trading in London the pound fell as low as $1.6375 as fears of substantially lower U.K. interest rates grew after last Friday’s quarter noint cut in the minimum lending rate. Although the pound later recovered slightly, its upward movement was cut short bv rews that U.K. miners are to hold a ballot on possible strike action over the question of their early retirement. The U.S. dollar experienced downward pressure against strong European currencies in response to lower U.S., in- ; terest rates. Dealers feel I that sterling will continue to; display an-erratic nature until the terms for IMF finance to the U.K. are known, and the British Government announces budgetary action to comply. The Canadian dollar slinoed lower, reflecting the half point cut in the Canadian bank rate, and political uncertainty after the French separatist victory in the Quebec election. November 24: After showing signs of recovery during trading in Continental centres sterling fell sharply in late trading on the London market to close at $1.6480, barely changed on the previous day’s $1.6468 close. The pound’s improving trend was reversed by the British trade union warning against deflationary Government policies, which raised fears that the U.K. Government may have difficulty implementing the conditions the IMF may impose as terms for granting Britain a loan. The U.S. dollar generally recovered ground against Continental currencies. Gold closed at $130.88. A.O.D. incurs loss Alliance Oil Development Australia, N.L., incurred a trading loss of sAust7.lM after write-offs in the year to June 30. The directors told stock exchanges that they reviewed and revalued the carrying interests in licence and permit areas at balance date, and together with the abandonment of other tenements, S7.OM was charged to group net trading loss.