STERLING RALLIES

Southland Times, Issue 21855, 4 November 1932, Page 7

STERLING RALLIES

BRITISH FUNDS FIRMER EFFECT OF CONVERSION OFFER PROJECT WELCOMED (United Press Assn.—Telegraph Copyright.) London, November 2. The Stock Exchange was immediately responsive to the conversion announcement. British funds appreciated sharply and sterling similarly rallied. Continental “bears” disappeared and instead Paris and Amsterdam are keenly buying forward sterling. Political circles expect that the immediate success of the conversion loan will be the rounding off of an unparalleled operation, removing the over-shadowing influence of large blocks of high-priced Government securities and helping industry to absorb the accumulated banking deposits, perhaps at cheaper rates. Commenting on the new conversion loan and other operations during the year The Times says: “Savings to the Exchequer, important as they are, do not exhaust the advantages or benefits of conversion. Other countries, particularly the dominions, have profited from the leadership of the British Government, for they have seen for the most a rise in their securities and have been enabled to convert relatively dear loans into exceptionally cheap loans. Municipalities have gained in the same way. The British Government’s action has brought advantages to British industrial and trading companies which are now able to raise fresh capital more cheaply than would have been possible, at any time since the war, as well as renew old capital on appreciably better terms. The lightening of the burden of debtors, whether governments, corporations or traders, has become one of the most pressing economic problems owing to the fall in the price-level over the last twelve years, and voluntary conversion offers the best possible solution.” A British Official Wireless message states that the announcement of the conversion loan issue was received with enthusiasm by the city, and great activity developed in the gilt-edged market on the London Stock Exchange. Although earlier sharp advances were not fully maintained the quotations remained considerably higher on the balance. The war loan assented closed at £lOO 5/-, well under the best. There was an increased demand for sterling, and an all-round improvement in the rates were recorded on the London foreign exchange market.