FALL OF STERLING

Nelson Evening Mail, Volume LXXII, 28 November 1938, Page 7

FALL OF STERLING

CONSIDERABLE COMMENT STABILISATION URGED JU P A —By Electric Telegraph—Copyright] (Received 28th November, 9.35 a.m.) LONDON, 27th November. The continued fall of sterling is arousing considerable comment. The “Investor's Chronicle,” regarding the pound as still over-valued, expresses the opinion that it will remain overvalued until an increase in commodity prices affects the enormous American export surplus which is causing part of the trouble. It adds that London's loss of foreign capital is not regrettable as it is locked up almost entirely in gold, but if it continues sufficiently it will be embarrassing. It recalls that last March Britain owned 836.000,000 of gold of which the Bank of England had 538.000,000 and the Exchange Account the remainder. The latter at present possesses only 80,000,000. as 90,000.000 went home to France last May, and about 120,000,000 to America owing to the September crisis and now a further 50,000,000 has followed. Accordingly a transfer from the Bank of England’s reserves to the Exchange Account can be expected any moment. Owing to the possibility of the transfer worsening the position through foreign nervousness the “Investor's” Chronicle” urges the stabilisation of sterling. If the British and American authorities decided to allow sterling to fall to 4.60, or even 4.50, they should put the rate there and announce that no further variations will be permitted, thereby removing the hopes of exchange profits and prevent capital fleeing ai the first signs of trouble.