BREAK WITH STERLING

New Zealand Herald, Volume LXXVI, Issue 23486, 25 October 1939, Page 10

BREAK WITH STERLING

THE JAPANESE YEN , . 7 ' AMERICAN DOLLAR" LINK (Received October 24, 11.35 p.m.) TOKIO, Oct. 24 The Ministry -of Finance announces that Japan has abandoned the historic yen-sterlingllintk t owing to the expectation of a prolonged European war and the British strengthening of exchange control. Hereafter the yen will be linked to the American dollar, and the rate for the yen 'will be 23 7-16 cents. Until /recently the yen was quoted nt Is 2d sterling, and in breaking the link wit!) sterling Japan follows the course taken since the outbreak of war bv Sweden. Finland and Norway, each a former member of the sterling bloc. Tn discussing those immediate results of the unpegging of sterling the Economist recently stated:—"All that need said of the incipient disintegration of the sterling bloc is that it is unfortunate in so far as it may bo the prelude to increased exchange instability, but that from the point of view of sterling it is not an unmixed evil. "For some years past the British Exchange? Equalisation Account had found to _ its cost that the adherence of certain foreign countries to tlio sterling hloc bad been a fnctor of instnbilitv. not of strength. Many sterling bloc countries have panicked into and then out of sterling with the abandon of the most highly-strung speculator. Some of the hottest of London's hot money has consisted of the sterling reserves of the ster 1i hg bloc. and th ei r partial disappearance will not be altogether a loss."