Sterling steadies

Press, 25 November 1982, Page 25

Sterling steadies

NZ°A-Reuter London Sterling steadied against other currencies on Tuesday after Monday’s buffeting on the foreign exchange markets, as a British. Cabinet spokesman said the pound’s recent sharp decline had left it undervalued.

Sterling traded about 1.5917 dollars in London after opening at 1.5897, down from Monday’s close of 1.5942. It edged up against European currencies, trading at 4.0605 marks after opening at 4.0500.

The pound fell three cents on Far Eastern markets on Monday as dealers reacted to a newspaper report that the British Government was prepared to see a further de-

cline in the value' of the currency, and, despite Bank of England intervention to prop up sterling, the drop carried through to European markets.

Mr Cecil Parkinson, chairman. of the Conservative Party, said in a radio interview on Tuesday that sterling was moving down to a level “where it is undervalued.”

Mr Parkinson said sterling’s recent fall was due partly to a belief that the Government was changing its policy, but “the Government is not changing it and has no intention of changing it.”

Sterling’s trade-weighted index, which slipped more

than three percentage points to 88.4 per cent of its 1975 value and fell still further to 86.7 on Monday, opened on Tuesday at 86.6 and rose to 87.0 by midday. Analysts said British trade figures released on Monday were better than had been expected, and would allow the pound to recover some of its lost ground. But they noted that the figures showed • trade in manufactured goods was moving into deficit for the first time in peacetime for more than a century and that the British economy was becoming ever more reliant on North Sea . oil revenues, threatening a longer-term weakness in sterling.