Currency report

Press, 10 November 1980, Page 24

Currency report

The United States dollar rose sharply, on the election of Mr Reagan as United States President, receiving a psychological boost from the victory of the Republican candidate, who is expected to adopt a monetary policy, and also from expectations that the United States interest rates will rise in the short term, according to the weekly foreign exchange report from the Bank of New South Wales.

The apparent impending release of the United States hostages in Iran also supported the dollar. Sterling firmed, as the estimated 2 per cent growth in money supply in October’s banking figures. makes an early cut in the minimum

■ lending rate unlikely. The i figures support the recent I estimate by the Chancellor i of the Exchequer (Mr Howe) i that ur. lerlying monetary growth the seven months Ito Sep iber was an annua- , lised t per cent compared with the target of 7 to 11 ■ per cent in the annual rate i in the 14 months to mid- > April next year. The deutschemark’s continuing weakness prompted the Bundesbank to intervene in the open market. General i market sentiment now predicts that the Bundesbank may soon have to consider :| raising West German interest rates to support the mark, regardless of the ef- ; feet on the domestic economy.