The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
OlVelON OF INTERNATIONAL FINANCE
IOABDW «B*«"
OF THE
FEDERAL *EiE*VE eVSTEM ,
-
H.13
no. m.
January 5, 1962
LP '
JAN 10
'
£ARITAL MARKET DEVELOPMENTS ABROAD
>•. J -DANK ;
Japan
TT^-ilight Charts on Financial Markets Abroad
I, Japan: Money and Capital Markets During November
Money market conditions eased in November as the rate of loss in
international reserves declined and Treasury and Bank of Japan operations
increased bank liquidity. Capital transactions were largely responsible fear
the smaller decline in.reserves which fell only $17 million compared with
losses of over $100 million in. each of the previous thrv months. The
capital account, which had been in deficit since August, registered a surplus
of $6U million in November as measured on an exchange transaction basis. Yhis .
was mainly due to the first drawing of $50 million in late November on Japan's
$200 million line of credit/with three American banks. The current account
deficit was reduced from $76 million in October to"$55 million in November
and the over-all balance of payments deficit of $106 million in October turned
to a surplus of $9 million in November. (Because of errors and omissions,
the monthly change in International reserves and the over-all balance of payments,
as measured on an exchange transactions basis, are rarely the same.)
In December, official international reserves dropped only $U million
to $1,185 million. Again the slower rate of decline can be attributed in part
to a second drawing in late December of $50 million on the $200 million line
of credit from three American banks. A World Bank credit of $h0 million to
the Japan Highway Public Corporation was not drawn upon during December even
though approved late in November.
In December, Japan took further steps to arrange for new foreign
credits. In the third week of the month, preliminary agreement was reached
with seven,American banks and the U.S. Export-Import Bank on a $125 million
line of credit for Japanese importation of cotton and grains. The credit is
to be for one year, carrying a U-l/2 per cent rate of interest, with the
commercial banks charging U per cent and the Export-Import Bank one-half per
cent as a guaranty charge. Also late in December, Japan approached the International Monetary Fund to arrange a standby-credit of about $300 million. The
Japanese anticipate that they will not have to draw on this credit in the
near,future.
Money Market, Money market conditions eased somewhat in November
as the Bank ol Japan continued to expand its credit and the Treasury made
substantial net outpayments. Bank of Japan loans and discounts rose ¥58 billion
to Ml, 110 billion, which was more than double the amount in October and about
the same as in September. Foreign exchange operations withdrew ¥25 billion
from circulation, reducing net Treasury outpayments to ?U5 billion. These
NOT FOR PUBLICATION
DECONTROLLED AFTER SIX MONTHS
NOT FOR PUBLICATION
-
2
-
expansionary developments were only partly offset by a ¥l£ billion
expansion in bank note issue,
J
Interest Rates. The average interest rate on bank loans and
discounts continued to rise through October reflecting the increase in the
Bank of Japan's basic discount rate in July and September, From a low of
7.38 per cent in June, the average rose to 8.09 per cent.in October.
Average yields on bank, public corporation and goYerir-ent defcent'v
were unchanged in November from the October levels, Yields on private
corporate debentures continued their downtrend iron the 7.529 per cent peak
-4n July, reaching 7.170 per cent in November. Local government bond yields
were also down slightly in November t-: 7.3blt per cent.
The highest Tokyo call-loan rate for those loans reliable at a dai
notice was off from 16«U3 per cent in October to l£«70 per cert .in vTovember,
Average Monthly Interest Rates on
Bank Loans and P if*, counts
Harch
Jime
Ueptenber
T'ecenber
1/
.61
:.6l
1959
I960
8.1%
{.38
6.21
8.22
3.1k
5.08
"
• 1961
7*92
7.^P
8.00
8.0? 1/
October.
Bank Loans and Discounts.' liank credit through October continued
to expand more slowly tnan a"year "earlier, thus continuing the slowdown first
evident Ui July. The main ascet. of corr-ercial banks rose 0.6 per cent in
Jctoter •,.:v.-ipared to a 1,1 per cent increase a year earlier. While the October
rise in Lil-.s discounted was the same as in I960, the expansion of loans and
•security h:>l: ings was less. bank deposits declined 1.9 per cent in October
compared to a 0,1; per cent decline a year earlier. The proportibn of bank
.i.oan-s and discounts extended for purchases of equipment rose to 17.2 per cent
•\n October, up from the 17.0.per cent level in September,
NOT FOR PUBLICATION
NOT FOR PUBLICATION
- 3 -
Commercial Banks: Quarterly changes in Deposits and Principal Assets
(In billions of yen)
Per
cent
Deposits change
MAIN
Per
cent
Bills
Loans change Discounted
19591
II
III
IV
+201
- 22
+276
+U75
3.1
-0,3
iwl
6.8
+11*3
+ 83
+136
+207
3.6
2.0
3,2
U.7
+ 21
+ 86
+11*9
+169
I960 I
II
III
Oct,
IV
+21*9
+ 96
+506
- 31
+607
3.h
1.3
6.5
—o.l*
7,3
+176
+167
+21*h
+ 1*3
+317
3.8
3.S
h.9
0.8
6.7
+ 51
+ 87
+172
+ 38
+185
1961 I
II
ni
Oct,
+502
+169
+359
-189
5.7
1.8
3,8
-1.9
+326
+206
+216
+ 5
5.9
3.5
3.6
0,1
+ 1*8
+133
+206
+ 1*5
ASSETS
Per
"
~~ Per
cent
cent
change Securities change
1.2
l*.9
. 8.1
8.5
:
2.5
3.9
7.5
iv5
7.5
1,8
U.9
7,3
1.5
+
+
+
+
51
62
58
66
5.2
6.1
5,3
5.8
+ 78
6.5
5.8
2.6
1.1*
9.1
+ 35/
, + 20
+127
+103
+101*
+ -U3
+ 20
6.8
6,1*
2.5
1,1
Stock Market, After a brief recovery of 10 per cent between
October 23 and November 8, stock prices continued their general downtrend in.
November and the first three weeks of December. On December 19,. the average
reached a low -for the year at ¥1,258, off 31 per cent from the July 18 alltime high of ¥1,830, During the remainder of December, the average moved up
111 per cent, reaching ¥1,1*33 at the end of the year.
In a move to prevent a further decline in the stock market, the
Bank of Japan late in November announced that it would supply funds to the
Japan Securities Finance Corporation for relending to security firms on the
basis of bonds and debentures held by them. The Japan Securities Finance
Corporation was set up in 1950 to provide, credit to those stock dealers and
individual buyers of securities not able to receive credit from security houses.
Dow Jones Average of 225 Stocks
Tokyo Stock Exchange
October 25
November 1
8
15
22
¥1,31*8
1,360
1,129
1,389
1,376
November 29
December 6
"13
20
27
¥1,303
1,318
1,291
1,282
1,321
NOT FOR PUBLICATION
I960 High ¥1,357
Low ¥ 869
1961 High ¥1,830
Low
¥1,258
- U-
NOT FOR PUBLICATION
Foreign Trade. The trade deficit, seasonally adjusted, improved
somewhat in November, but still remained excessively large. Imports worsened
further, rising to a new all-time high and exports were up, following a dip
_in October, to about the same level as in August, The slight improvement in
the trade account was reflected in a further decrease in the deficit on current
account, as measured on an exchange transactions basis, which declined from
$76 million -in October to $55 million in November. Largely in resoonse to a
$50 million drawing in November on Japan's $200 million line of credit with
three American banks, the capital account deficit of S30 million in October
changed to a surplus^of $6U million in November. The monthly averages of seasonally adjusted trade figures (in millions of dollars) are detailed below.
Exports
Imports
Trade Balance
1960
Year
IV
337
353
375
395
- 38 •
- U2
1961
I
CI
J:.:I
3bh
3#
359
U20
L66
511.
- 76
358
363
356
333
366
1-77
5U3
512
556
568
-119
-ISO
-156
-223
-202
July
August
September
October
November
-115
-152
Foreign Exchange. f.irms of a strengthening of the yen in the
three-month forward market, which fir it eppe.*xred in October, continued in
•ovc. 'bcr and through .niti-Doceriber. while the yen-dollar spot rate continued
to remain at the official support :-oint during this period, the forward
'; 1;:cou.rb of the yen
the dollrT. fell from 1.33 r»er cent per annum on
.'rivtV-r T; to
par cn it v.'r :v::v;n 011 Docerlber' 15. Fron mid-July througr. *
5
l'- ct-v'-r the d:.vCO*V;t .'rxi vr. -1'tnri rt l.LL per cent per annum or higher.
1his uvula r.vocar to refloat increased confidence in the yen stemming from
lower reserve losses, even though the smaller losses were to a large extent
the result of additional short-tern borrowing by Japan.
I
Customer's ?. T. Exchange Rates
of Bank of Tokyo in Tokyo
Yen-dollar
spot riidcl 3 rate
r.to
3-nonth
forward middle rate
Forward discount
in per cent per annum
27
361.10
362.30
1.33
3
361.10
361.10
361.10
361.10
362.30
362.00
361.90
361.90
1.33
1.00
.89
.89
361.10
361.§0
361.80
361,10
361.30
361.10
15
PUBLICATION
NOT
FOR
Far
East
Section,
.22
October
rioveruber
10
17
2h
r?-cor.bor i
NOT FOR PUBLICATION
II. Eight Charts on Financial Markets Abroad
1 - Interest Arbitrage U.S ./Canada
2 - Interest Arbitrage New York/London
3 - Interest Arbitrage New York/Frankfurt
I4. - Short-term Bond Yields
5 - Long-term Yields
6 - Industrial Stock Indices
7 - Major Currencies in Terms of Spot
United States Dollar
Chart 8 - 3-month Forward Rate—London Quotations
Chart
Chart
Chart
Chart
Chart
Chart
Chart
NOT FOR PUBLICATION
t,
INTEI
6E,
ithundoy llgum
THREE-MONTH
UNITED S T A T E S / C A N A D A
TREASURY
RATE DIFFERENTIAL A N D
Bill
RATES
FORWARD
CANADIAN
DOLLAR
S M I A f t IN FAVOB OF CANADA +
A
\
FOIWAID IATI
] PlKMIt — |
RATE DIFFERENTIAL W I T H
FORWARD
1H0
EXCHANGE COVER
INTEREST ARBITRAGE/
NEW
YORK/LONDON
I Friday figures
3-MONTH TREASURY BILL RATES
EU»0 D O H A ! RATt-tOMDON
RATE DIFFERENTIAL AND
J
3-MONTH FORWARD STERLING
S P R E A D IN ' F A V O R Of L O N D O N
R A T E DIFFER E NT IA L WITH
FORWARD EXCHANGE COVER
CSsiDlI
! INTEE1ST A M I T K A G E
Friday H g i m .
^3-MQJSjTHTr'EASURY
f GERMAN
3-MONTH
FO«
"
Bill
GERMAN
RATES
INTERBANK
A
COMMER
:
N
-
LOAN
rr%t tui pt, qm.«
RATES 1
OERMAN 3-MONTH
I N T E R B A N K L O A N BATE
:
w
>
W
GERMAN 3-MONTH
U S . TREASURY BILLS
RATE D I F F E R E N T I A L
AND
FORWARD
DEUTSCHE
MARK
5
S P R E A D IN F A V O R OF FRANKFURT
L O A N RATE
F O R W A R D RATE D I S C O U N T C - }
RATE
DIFFERENTIAL
WITH
FORWARD
EXCHANGE
COVER,'
INCENTIVE
Note: Speelel forward dell
IN F A V O R OF FRANKFURT! ( + )
INTilBAIIK
10AM
'
IN F A V O R OF NEW YORK ( - )
I ATI
TliASBtY
UfiL
/
v - '
IIIIS
SHORT-TERte
INTEREST
RATES
*
tU?0-PC:.lA»
- IQNDON j"
CANADA
S
\-H-
-
3-monlh Ireaiury bill rates (or all countriei excepl Jbpon ^-m»nlh interbank depoiil rale) and Switzerland ()-monlh depoiil role) |
*j", 3-monlh rale for U. S. dollar depoiili in London.
L O N G - T E R M B O N D YIELDS
./V
11151
1*5$
11*0
1161
1162
INDUSTRIAL
STOCK
INDICES*
1958=100
GERMANY
/
\
J Kr
r*
0
SWITZERLAND
-Ax-
k
M
i i
i i
i i
1 1
i i
i
i
I
i
M
I I
I
I I
1 1 I I
1 1 I I
1
I I
1 I I
I I
1 1 I U
A
/ x T
\
w
•")»»»«
U.S.
CANADA
Li 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 111 11 11 1 1 1 1 111 11 11 1 1 1 1 1 l >
1959
!Nole:
1960
Japan: Index ol all ilocki traded on Tokyo exchange.
1961
19*1
ENCIES IN
T E R M S O F THE S P O T
U.S.
DOLLAR
U.». STEtllN6
FIENCH FlANC
LCIUH f l A N C
Ab
9VJL p e r j
ITALIAN I I I A
J A M N E S E YEN
dollar!
1*10
1
H61
1**1
3-MONTH
F O R W A R D RATE
1
A G A I N ST U . S . D O L L A R s
•
G E R M A N MARK
PREMIUM+
SWISS F R A N C > V X v Z V
\J
DISCOUNT1
1
I
l
1
1
1
1
1
1
•AGAINST POUND_STERlING - LONDON
PREMIUM +1
G E R M A N MARK
AGAINST POUND STERLING" LONDON"
1961
1
-
-
'OUND STERl IN6
1
1
i
i-
i
i
i
i
i
i
+.
@FedFRASER