SHARP FALL IN STERLING

Taranaki Daily News, 27 October 1932, Page 5

SHARP FALL IN STERLING

“SEASONAL INFLUENCES’-’ DETERRENT ON SPECULATION EQUALISATION ACCOUNT HINTS OF INTERVENTION British Wireless. Rugby, Oct. 25. A general decline in the value of sterling is again shown on foreign exchanges to-day. A variety of reasonsis advanced for the sensational fall and in answer to a question in the House of Commons the Chancellor defined the purpose of the exchange equalisation fund, which unfounded rumours abroad have suggested to be exhausted. The Standard hints that the Treasury and the Bank of England will shortly intervene, with disastrous results to speculators. The low price of the pound is attributed in London city circles to influences of a seasonal character, which naturally are more marked since the departure from the gold standard, accelerated by selling by foreign speculators whose operations are considered to be attended by a considerable measure of risk to themselves.

Answering a question in the House of Commons as to whether the speculation attacks on sterling had been checked by the exchange equalisation account, Mr. Neville Chamberlain, Chancellor of the Exchequer, replied that he was unable to say to what -extent speculation in exchange existed, but he had no doubt that reserves of foreign currency in this account acted as a deterrent against the activity of speculators.

The purpose of the account was to prevent excessive fluctuation in the value of currency, Mr. Chamberlain said, and it was never intended to keep the exchange at a fixed price or to keep it within a fixed range of values in opposition to seasonal or other tendencies. A new 1932 low level was touched by sterling to-day in Now York, the pound closing If cents lower at 3.30 J dollars for cables after rallying from the opening price of 3.29|. It was believed that official support was withdrawn again since sterling’s decline last Tuesday when the currency was stabilised close to the level. Bankers in New York said British support would: come again when sterling reached a level that could be supported with greater ease, but there were no indications that the level was forthcoming. ' The fall in sterling is ascribed by the Standard to the recall of French funds for the impending State loans .and to ‘“bear” attacks at Paris and Amsterdam based on unfounded rumours that the exchange equalisation fund is exhausted and that Britain is short of dollars for the December payments.