Currency report

Press, 19 April 1982, Page 26

Currency report

Activity in world currency markets continues to centre around the growing strength of the US dollar vis-a-vis other major currencies, says the Bank of New South Wales in its weekly foreign exchange- report.' Speculation about a possible devaluation of the French franc and Belgian franc in coming months, and the resultant strains within the European monetary system. increased continental demand for U.S. dollars, increases in Eurodollar rates and a firmer Federal funds rate also lent support to the dollar. Sterling weakened against all major currencies last week. For the greater part of the week the pound fluctu-

ated only marginally against other major currencies, supported by fairly steady U.K. interest rates. The implications for sterling of the Falkland Islands dispute are unclear, especially since heavy domestic criticism of the U.K. Conservative Government appears to have abated. Although market operators could be nervous of holding sterling while the dispute continues, there is no clear reason to sell the pound. Despite strong intervention by the Bank of Japan throughout the week the yen continued its decline against most other major currencies. Constantly high import settlement needs weakened the Japanese unit.