WORLD AFFAIRS.

Star (Christchurch), Volume LXVI, Issue 20649, 25 June 1935, Page 7

WORLD AFFAIRS.

Wide Range of Currency Movements. FINANCIAL REVIEW. International finance has had much to occupy its attention in the past month. The decisions of the United States Supreme Court, which declared invalid practically every major feature of the New Deal, the attacks on the gold countries, culminating in a foray against the French franc; and the. Parliamentary turmoil in France—these have caused disturbance of varying degree. Although no fundamental change hss emerged out of the disturbances, the unsettled conditions make it necessary to recognise the possibility of rapid and unexpected movements in any or all of the leading countries, says the latest review of H. Byron Moore, Day and Journeaux, of Melbourne. Apart from the increases in the bank rates by Holland and France, the chief centres show no alteration. Interest rates continue low in London and New York, but the tendency is firm and certainly not downward. The changes in the rates of the Netherlands Bank and Bank of France recall the fact that the Bank of England rate has been unaltered for a record long period Bank rates of the principal countries and their changes have been as under:— London—Unchanged at 2 per cent since June 30, 1932 Paris—2i per cent on October 9, 1931 ; raised to 3 per cent on February 8, 1934; back to 2\ per cent on May 31, 1934; raised again to 3 per cent on May 23. 1935, further to 4 per cent on May 25. 1935, and to 6 per cent three days later. New York-—2 per cent on October 20. 3933; reduced to l£ per cent on February 1, 1934. Berlin—Unchanged at 4 per cent since September 22, 1932. Brussels—32 per cent on January 13. 1932; reduced to 3 per cent on April 26, 1934, and to 2J per cent on August 28, 1934. Geneva—Reduced from 21 per cent to 2 per cent on January 22, 1931. Milan—Reduced from 4 per cent to 3 h per cent on March 25, 1935. Amsterdam—From 3 per cent to 2i per cent on September 18, 1933; advanced to 3$ per cent on April 5, 1935. further to 4$ per cent on April 9, 1935, and to 5 per cent on May 31. The rise in bank rates in Holland and France was applied as a brake on the outflow of funds, but the efficacy of the action was due more to the calm in London than to the higher rate. Since the fall of the belga there has been no sharp increase in prices in Belgium. particularly desires not to embarrass France or Great Britain (or risk reprisals) by taking advantage of the devaluation to expand exports. Canada’s 60,000,000 dollar loan, was oversubscribed by five million dollars. Portion of the loan is for eight years at 2i per cent and the balance for ten years at 3 per cent. The French Government which took office on June 1 (and left on June 4), had time to suggest that Great Britain and America be asked to stabilise the £ and dollar on the basis of the present parity of the franc. Earlier, the United States had announced that it ivould not place any obstacle in the way of international currency stabilisation. The stage is considered to be clear for diplomatic overtures. However, much more is likely to be done in quiet talks in the central banking chambers of the world than in diplomatic conferences. Wall Street and business leaders generally have made it clear that they favour stabilisation with sterling at the old parity of 4.86 2-3. England is prepared to discuss stabilisation but points out that there must be a reasonable belief in the soundness of international affairs. A premature move would result in a condition of affairs far worse than the present, because the failure would discourage and delay any further move.