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DIVISION O F I N T E R N A T I O N A L F I N A N C E
B O A R D OF OOVERNORS
H. 13
July 13, 1966.
No. 256
[CA_P
CAPITAL MARKET DEVELOPMENTS ABROAD
I.
II.
III.
I.
Japan
Nine Charts on Financial Markets Abroad
Latest Figures Plotted in H. 13 Chart Series
Japan:
Money and Capital Markets in May-June 1966
1.
2.
3.
4.
5.
6.
7.
8.
9.
Introduction and summary
Money market
Interest rates
Bank loans and discounts
Bond market
Stock market
Foreign trade
Foreign reserves and capital flows
Foreign exchange
1.
Introduction and summary/ During May and june, various steps
were taken by the authorities to forestall a shift from foreign dollar financing of imports to domestic financing. The problem was aggravated by the
steady rise in the rate on U. S. bankers' acceptances. Available reports
indicate that so far such shifting has been relatively small.
(For further
details, see "8. Foreign reserves and capital flows.")
Japanese borrowing in the United States rose by $76 million in March
according to preliminary data.
An increase of $83 million in short-term
borrowing was partly offset by a $7 million decline In long-term borrowing.
In April, there was no change in short-term claims on Japan reported by U„ S.
banks, but long-term claims declined $4 million.
(See Table 1). For the two
months together, there was an overall increase in Japanese borrowing in the
IL S. of $72 million.
Table 1„
Japan
S.
(in millions of dollars)
Change during year
1962 1963 1964 1965
Short-term claims—/
Long-term claims 1 /
TOTAL
212
50
431
128
482
136
-59
15
262
559
618
-44
Change during period
1966
1965
III
IV
I
Jan.
Feb.
-125 - 4
;
8 22k
-133 -30
16^/
-11-E/
5f/
OFFICIAL USE ONLY
(Decontrolled after 6 months)
-69
Z_1
-76
2
_3
5
Mar.
83%/
^72/
Apr.
Of/
762/ -42/
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Table 1 (Cont.)
Table 1.
Japan:
Short- and Long-term Borrowing in the U. S.
(in millions of dollars)
Change during year
1962 1963 1964 1965
Security Flotations
TOTAL
141
200
0
63
403
759
618
19
Change during period
1966
1965
Jan. Feb.
III
IV
I
20
20
-113 - 1 0
0
52/
0
0
-76
5
Mar.
Apr.
0
76^/
1/ U. S. claims on Japan as reported by U. S. banks.
£ / ^ Preliminary.
NOTE:
See Tables 9 and 10 for adjustments to the figures on claims that might
affect the changes^indicated here. Newly reported data added $150 million
to short-term claims in 1964, and $47 and $45 million to long-term claims
in 1963 and 1964, respectively.
i r
xAfter declining moderately in April-May, international reserves rose
$8 million in June to a level of $2,104 million. The seasonally adjusted trade
balance registered surpluses of $15 - $18 million during March; April and May.
The yen remained weak in the foreign exchange markets during May and the first
half of June.
«
Money market- conditions remained easy in April.,,but became tighter
in May.
Short-term bank interest rates continued their decline, but call loan
rates were unchanged.
The stock market average fluctuated in the ¥1,500's
during May and June, held down partly by the unloading of stocks by two stockbuying agencies.
2. Money market. Money market conditions remained easy in April as
net Treasury payments of ¥232 billion swamped the contractionary influence of a
¥163 billiod"tiecline in net Bank of Japan credit ^nd a ¥32 billion increase in
the issue ojt bank notes, leaving a net expansionary impact of ¥36 billion.
In
May. the contractionary effect of net Treasury receipts of ¥25 billion and a
decline in net Bank of Japan credit of ¥74 billion was only partly offset by
a ¥85 billion decrease in the issue of bank notes, leaving a net contractionary
impact of ¥14 billion.
3.
Interest rates. Call loan rates have' remained unchanged since
October 1, 1965.
(See Table 2). This contrasts with the May-October period
last year when they were reduced four times.
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0
-4^/
-3-
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Table 2.
Japan;
Average Call Loan Money Rates in Tokyo
(per cent)
Overnight!/
Throughout April
Throughout May
Throughout June
1/
2/
31
Over-month-end2/
Unconditional^/
5.840
5.840
5.840
5.475
5.475
5.475
6.570
6.570
6.570
For settlement on the following day.
Repayable at a day's notice.
Repayable at a day's notice in the following month.
The average interest rate on commercial bank loans and discounts
continued its decline to 7.54 per cent in March and 7.53 per cent in April.
The rate has declined steadily since its peak of 7.99 per cent at the end of
1964, but at a much slower pace in recent months.
Authorized rates on Euro-dollar deposits were raised for deposits
of over one month on March 22, and for all deposits on May 5.
(See Table 3).
The rates are now the highest that have been prescribed since the Japanese
Government began to regulate them.
Table 3.
Japan:
Effective:
Less than 30 days
1 - 3 months
3 - 6 months
6 - 1 2 months
1 year and over
Maximum Authorized Rates on Euro-dollar Deposits
12/30/65
12/31/65
4.25
5.675
5.675
5.75
6.0
4.25
5.5
5.5
5.5
5.75
1/ 5/65
4.25
5.25
5.5
5.5
5.75
2/ 7/66
3/22/66
5/ 5/66
5.0
5.5
5.675
5.75
6.0
5.0
5.875
6.0
6.125
6.25
5.5
6.0
6.125
6.25
6.385
4.
Bank loans and discounts. For the first quarter as a whole,
there was a 2.5 per cent increase in commercial bank credit to the private
sector, which includes a decline in credit registered in January for the first
time in many years. The first quarter figure compares with a 2.9 per cent
increase in the same period in 1965.
Deposits rose by 4.2 per cent during
the quarter, compared to an increase of 3.5 per cent in the first quarter of
1965.
(See Table 4).
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OFFICIAL USE ONLY
Table 4.
Japan:
TOTAL
1963
I
II
III
IV
+1 ,158
405
+ 1 ,019
+ 947
1964
I
II
III
IV
+
+
Quarterly Changes in Deposits and Principal Assets of Commercial Banks
(in billions of yen)
Per
Cent
Change
Loans
Per
Cent
Change
Per
Cent
Change
Bills
Discounted
Per
Securi- Cent
ties Change
TOTAL
Per
Cent
Change
8.8
3.1
7.4
6 .4
+717
+365
+524
+589
9.3
4.3
5.9
6.3
+185
+150
+245
+293
4.9
3.8
6.0
6.8
+27
+73
+14
+41
1.2
3.3
0.6
1.8
+
+
+
+
929
588
783
923
6.8
4.0
5.1
5.8
459
65
944
860
2.9
-0.4
5.9
5.1
+344
+278
+335
+574
3.5
2.7
3.2
5.3
+111
+218
+291
+206
2.4
2.7
6,0
4.0
- 26
+348
+148
+180
-1.1
14.9
5.5
6.4
+
+
+
+
429
754
774
960
2.5
4.3
4.3
5.1
1965
I
II
III
IV
620
158
+1,,311
+1,,034
3.5
-0.8
7.2
5.3
+404
+292
+496
+642
3.5
2.5
4.1
5.1
+ 48
+ 63
+217
+225
0.9
1.2
4.0
4.0
+118
+310
+224
+303
3.9
9.9
6.5
8.3
+
+
+
570
665
937
+ 1 , 170
2.9
3.3
4.4
5.3
1966
I
+
4.2
+442
3.3
0
0.0,
+128
3.2
+
2.5
+
+
-
-•
+
867
y
570
In April , commercial bank credit to the private sector fell by 0.7
per cent compared to a 1. 0 per cent increase a year earlier. There were declines
of 1. 2 and 0.8 per cent, respectively, in loans and bills discounted, compared to a decline of 0.1 per cent in both sectors last year. There was a 1.6 per cent
increase in securities holdings, which was notably less than the 8.0 per cent
increase in April of last year.
Deposits declined in April by 3.3 per cent, a
slightly higher drop than the 2.6 per cent decline sustained in the same month
in 1965,
The proportion of bank credit extended for purchases of capital equipment fell to 17.3 per cent in March, but rose to 17.5 per cent in April. This
compares with the previous high of 17.6 per cent reached last November.
Bank of Japan credit in April and May was highly contractionary,
primarily because of heavy net sales of securities, but in both months
reinforced by a decrease in lending.
(See Table 5).
OFFICIAL USE ONLY
OFFICIAL USE ONLY
Table 5.
Japan:
Changes in Bank of Japan Loans and Holdings of Securities
(1)
Period
-5-
(2) + (3)
Net increase (+)
or decrease ( - )
(2)
Loans: Increase (+)
or decrease ( - )
(3)
Net purchases (+) or
sales ( - ) of securities
1964
I Quarter
II Quarter
III Quarter
IV Quarter
+203.3
+ 75.7
+106.1
-329.6
+ 36.7
+121.0
+ 97.5
-300.5
+166.6
-196.7
1965
I Quarter
II Quarter
III Quarter
IV Quarter
+217.5
-124.0
+ 89.8
-129.8
+216.5
- 14.4
+133.1
-182.0
+
1.0
-109.6
- 43.3
-311.8
1966
I Quarter
January
February
March
April
May
+276.0
+ 48.9
+223.7
+
3.4
-163.5
- 74.5
- 3.2
+ 34.1
+279.2
+ 14.8
+204.9
+ 59.5
-134.1
- 70.0
+ 18.8
- 56.1
- 29.4
- 4.5
+
8.6
- 29.1
5. Bond market. New issues of bonds in February totaled ¥217 billion,
down ¥2 billion from the January level. In March, however, new bond issues rose
sharply to a record level of ¥325 billion, up ¥108 billion over the February
level. The increase resulted chiefly from a ¥90 billion increase in public
corporation bonds to ¥142 billion. Bank debentures also rose ¥10 billion to
¥137 billion, while industrial debentures were up by ¥8 billion to ¥46 billion.
Complete data for April are not yet available, but new issues of bank debentures
fell by ¥10 billion and industrials by ¥15 billion.
Bond yields were unchanged in April in the government sector and were
slightly lower,in the private sector. Yields on local government securities,
public corporation bonds, and one-year bank debentures remained at their 196465 levels of 7.354, 7.053 and 6.244 per cent, respectively. The yield on longterm debentures fell from 7.285 per cent in March to 7.280 per cent in April,
while the yield on industrial bonds fell from 7.508 per cent in March to
7.473 per cent in April.
Newspaper reports indicate that demand in the private sector for the
new issues of national government bonds weakened slightly in May and June. During
the last week of June, the average bond price was ¥98.50 compared to the issue
price of ¥98.60. The average yield was therefore 6.827 per cent in contrast to
the 6.795 per cent yield to subscribers at the time of issue.
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- 6-
6.
Stock market. The Dow-Jones stock average fluctuated in the
¥1,500's during May and June, dipping below the ¥1,500 mark on June 1 and
June 30.
On July 11, the average was ¥1,481 or 7 per cent below the high
for the year reached on April 1.
(See Table 6).
Table 6.
April
25
May
2
9
16
23
30
Japan
Dow-Jones Average of 225 Stocks, First Section of Tokyo Exchange
¥1 ,530
1 :.566
1,,573
1.,558
1., 561
1.,513
June
July
6
13
20
27
¥1 ,524
1 ,526
1 ,515
1 :,521
4
11
1.,533
1 ;,481
1965
High
Low
¥1,409
¥1,020
1966
High
Low
¥1,589
¥1,410
The failure of the market to rise during April-June probably reflected
in large part the unloading of stocks by the two special stock-buying agencies
created during 1964-65.
During the March to early May period, the Japan Stock
Holding Association (JSHA) and the Japan Joint Securities Company (JJSC) sold
¥61 billion in stocks previously purchased. This reduced the holdings of the
two groups from ¥428 billion to ¥367 billion (on the basis of original purchase
value). The JSHA reportedly sold an additional ¥20-30 billion in stocks in
June. The Bank of Japan has advised both agencies to unload all of their stocks
by March 1968 w h e n the revised Securities Trading Law goes into effect.
In a
move to reduce other possible downward pressures on the market, stock margin
requirements were lowered from 50 to 30 per cent on June 4 , and further
releases of stocks by the JJSC and JSHA will reportedly be delayed until
September.
In recent months stock prices have averaged about 50 per cent above
last year's low. Recognizing this general improvement in the market, the
authorities announced in mid-May that effective this coming October the restrictions on increases in corporations' capital would be abolished, although certain
minimum requirements for new stock issues must still be observed.
7, Foreign trade.
In March, April and May, exports, seasonally
adjusted, were virtually at the same level, about 4 per cent above the average
of the previous three months.
Imports, seasonally adjusted, were also at
virtually the same level, about 7 per cent above the average of the previous
three months. The result was a monthly surplus of $15-18 million on a seasonally
adjusted basis.
(See Table 7). This was substantially less than the average of
the previous three months, but the latter was brought up by the exceptionally
high January exports. The April-May—performance is still very good for Japan
in relation to the performance in earlier years.
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Table 7.
Japan:
I
Imports
a/
b/
659
677
- 18
-7-
Seasonally Adjusted Foreign Trade, Monthly or Monthly Averages(in millions of dollars)
II
687
712
+ 25
1965
III
685
732
+ 47
IV
693
694
+
1
Dec.
688
675
- 13
Jan.
I
741
788
+ 47
701
838
+137
1966
Feb. Mar.
761
745
- 16
762
780
+ 18
Apr,
763
781
+ 18
768
r/
r f a i /
All figures on a customs basis,
Preliminary.
8. Foreign reserves and capital flows. International reserves rose
by $8 million in June to $2,104 million. Following the low in July of last
year, reserves rose steadily until April and May of this year, when there were
declines of $11 and $2 million, respectively. The June recovery leaves reserves
$154 million above the level of last July.
The ratio of international reserves to the note issue of the Bank of
Japan rose in May to 33.9 per cent.
(See Table 8). The improvement in the
ratio in May resulted mainly from a 4 per cent decline in the outstanding
volume of bank notes issued.
Table 8.
End i
of Period
1966
Ratio of Reserves to Bank Notes
Bank Notes
Issued
(billions of yen)
Reserves/
Bank Notes
(per cent)
¥520 .9
701 .6
599 .8
727 .9
740 .9
719.6
758.5
¥1 ,029.4
1 ,234.1
1 ,480.1
1 ,745.9
2 ,057.4
2 ,298.8
2 ,563.8
50.6
56.9
40.5
41.7
36.0
31.3
29.6
July
August
September
October
November
December
724,.1
712,.8
702,.0
707,,0
708..8
719..3
751.,0
758.,5
1 ;,975.4
2,,078.3
2,,083.1
2,,038.2
2,,033.2
2,,053.2
2:,107.4
2.,563.8
36.7
34.3
33.7
34.7
34.8
35.0
35.6
29.6
January
February
March
April
May
749.,5
759.,2
759. 2
755. 3
754. 6
2.,200.5
2.,251.1
2.,280.4
2,,312.9
2!,227.5
34.1
33.7
33.3
32.7
33.9
1959
1960
1961
1962
1963
1964
1965
1965
Japan:
International
Reserves
(billions of yen)
May
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OFFICIAL USE ONLY
-8-
The overall Japanese balance of payments showed a small deficit in April
and May.
In April, the trade surplus fell sharply, but the capital outflow
also decreased compared to the two previous months.
In May a substantial
surplus on trade account was registered, but the capital outflow resumed at
about the same level as in February and March. The net result was a slight
decline in reserves.
Table 9,
Japan:
an Exchange Transaction Basis
Balance of Payments
(in millions of dollars)
I
Trade account balance
Services balance
Current account
51
-44
7
Net long-term capital
receipts
Net short-term capital
receipts
Net balance on capital
account
Errors and omissions
Overall balance of
payments
NOTE:
1965
II III
85
-•58
27
173
- 56
117
1966
Jan. Feb. Mar.
Apr. May
IV
I
151
- 54
97
80
-52
28
1
109
ill
-50
I_A3
56
131
- 61
70
-. 16
- 76
- 4
- 22
-
-
3
- 6
- 27
- 49
5
-10
- 24
- 23
-45
-43
11
-44
- 80
- 18
13
51
8
63
-60
3
114
- 59
55
16
-54
-103
- 41
-32
8
- 24
- 79
-11
- 6
-11
-
8
- 10
4
17
- 15
9
- 4
-
8
17
- 37
6
46
1
-25
27
0
-11
-
2
Quarterly data are monthly averages.
Data may not add exactly because of
rounding. These data also differ from those in the earlier table on
foreign trade as these are on an exchange transactions, rather than
customs, basis, and are not seasonally adjusted.
According to preliminary data, Japanese short-term liabilities to the
U. S., as reported by U. S, banks, rose $83 million in March and remained
(See Table 10).
unchanged in April.
Short-term Claims on Japan Reported by U. S. Banks
(in millions of U. S. dollars)
1959
1960
1961
1962
1963
1964
1965
1966
a/
b/
Jan.
Feb.
168
326
875
1 ,601
1 .697
2 ,247
175
372
952
1 ,685
1 ,691
2 ,360
1,778
1,751
2,400
2 ,742
2 ,692
2',746
2,,694
2,777-
June
1,159
1.775
1,876
2,394
1,196
1,762
1,272
2,834
2,880
Aug.
1,767
2*830
Sept.
Oct.
Nov.
262
660
1,288
1,711
1,890
2,493
262
693
1,281
1,710
1,904
2,488
275
711
1,292
1,662
2,017
2,496
Dec.
324
806
1,528^
1,740
2,171 ,
2,810-{
b/
2,755 2,656 2,683 2,761-
PreliminIncludes newly reported data totaling $52 million in December 1961, $157 million in
December 1964, and $10 million in December 1965.
OFFICIAL USE ONLY
-9-
OFFICIAL USE ONLY
Long-term Japanese liabilities to the U. S. fell by $7 million in March
and $4 million in April.
(See Table 11). These declines continued the steady
fall in Japan's long-term liabilities to the U. S. since the record high of $483
million was-, reached last May.
Japan has reduced these liabilities by $53 million
since then.•
Table 11.
1959
1960
1961
1962
1963
1964
1965
1966
a/
b/
Long-term Claims on Japan Reported by U. S. Banks
(in millions of U. S. dollars)
Jan.
Feb.
Mar.
Apr.
May
13
16
19
24
74
280
455
438
14
16
19
25
74
295
454
441
15
14
18
31
76
311
472,
434—
15
14
19
28
83
319
479
430f/
17
14
18
29
104^/
323
483
June
17
14
19
49
111
325
479
July
16 .
18
20
50
119
329
482
Aug.
15
18
19
54
136
332
475
Sept.
Oct,
Nov.
Dec.
16
21
25
54
143
351
471
15
21
23
62
146
352
464
16
19
25
69
170
269
462
16
19
24
74
249^/
430^/
445
Preliminary.
Includes newly reported claims totaling $1 million in May 1963, $46 million in
December 1963, and $45 million in December 1964.
Rising interest rates in the United States, particularly for bankers'
acceptances, have posed problems for the Japanese since in some cases domestic
sources of import financing are cheaper than foreign sources. Between December 10,
1965, and May 28, 1966, the prime rate for 4-month dollar import acceptance credits
was increased by the authorities from 7.0 to 7.5 per cent. Comparable domestic
financing, however, is available in Japan at a rate of 7.3 per cent. Although
the general level of rates on dollar import acceptances was increased again on
June 13, the rate for the very best customers was held unchanged at 7.5 per cent
by establishing a new, more restricted, prime rate.
Japanese authorities are, of course, concerned that a large-scale shift
to domestic import financing, and a subsequent reduction in foreign borrowing,
would place substantial downward pressures on international reserves as reserves
are drawn down to pay off foreign obligations. With the object of discouraging
such shifting so as not to decrease official reserves, several measures were
taken in mid-May by the authorities. Exchange banks were ordered to lower their
commission rates on dollar import financing, to differentiate their rates
according to industries and enterprises, and to adhere to newly established
limits on import acceptances.
It is estimated that the decision in June to
permit iron and steel importers to utilize dollar import financing on a threemonth basis, rather than four-months, will result in a shift from foreign to
domestic import financing of about $100 million.
Should the shifting show signs
of becoming very substantial, there are reports that the Japanese financial
authorities may try to counter the move by taking action in the futures foreign
exchange market, or by drawing on the "swap" stand-by facilities with the
Federal Reserve System.
OFFICIAL USE ONLY
OFFICIAL USE ONLY
-10-
9. Foreign exchange. The yen generally remained weak during MayJune, hitting some of the most depreciated levels during the past year. The
spot rate for the yen was ¥362.50 to the dollar in early May, or the most
depreciated level since May of 1965. After a show of strength during mid-May,
when the rate fell to ¥361.80 to the dollar, the yen weakened again, reaching
the previous high of ¥362.50 in mid-June.
In the three-month forward market,
the rate for the yen strengthened during May and early June, but then weakened
substantially through mid-June.
The strengthening in the spot market in midMay reduced the forward premium and temporarily changed it to a discount, but
the rate increased again through mid-June.
(See Table 12).
Table 12.
Japan:
Customer's T. T. Exchange Rate of Bank of Tokyo in Tokyo
Yen-doliar
spot middle
rate
Three-month
forward middle
rate
Forward premium
in per cent
per annum
April 18
25
362.35
362.35
361.75
361.85
. 66
.55
May
2
9
16
23
30
362.50
362.35
361.95
361.80
362.35
361.95
362.95
361.97
361.87
361.77
.61
.44
.03*
.08*
.63
6
13
. 15
362.40
362.45
362.50
361.87
361.97
362.02
.58
.53
.53
June
*
Discount
Asia, Africa and Latin America Section,
Division of International Finance.
OFFICIAL USE ONLY
NEW YORK, L O N D O N , MONTREAL:
Y I E L D S FOR
DOLLAR
U . S . DOLLAR
DEPOSIT
RATES:
INVESTORS O N
NEW
3 - M O N T H FUNDS
"X
YORK-LONDON
EURO-DOLLAR D E P O S I T
U . S . C E R T I F I C A T E OF D E P O S I T
I
E U R O - D O L L A R OVER
U . S . C E R T I F I C A T E OF D E P O S I T
FINANCE
CO.
PAPER
0
RATES ( c o v e r e d ) ;
QUOTED
IN
NEW
YORK
CANADIAN FINANCE
COMPANY
U.K. HIRE PURCHASE
U.S. FINANCE COMPANY
Sept.
Dec.
Mar
Jun.
1965
Sept.
Dec.
Mar.
Jua.
1966
Sept.
Dec.
LONDON:_ YIELDS FOR U.S. DOLLAR INVESTORS ON 3 - M O N T H FUNDS
EURO-DOLLAR
fridoy figure*
DEPOSIT
RATES
9 0 DAY
HIRE P U R C H A S E
fridoy figure*
AND
LOCAL
AUTHORITY
DEPOSIT
RATES
(covered)
EURO-DOLLAR DEPOSIT
HIRE P U R C H A S E
FAVOR HIRE P U R C H A S E
DIFFERENTIAL
FAVOR EURO-DOLLAR
i
|
'
I...
L,
j
1
1
i
r
t
t
LOCAL AUTHORITY DEPOSIT
EURO-DOLLAR DEPOSIT
1
I
I
DIFFERENTIAL
|
1
1
1-
J
f
FAVOR LOCAL AUTHORITY
FAVOR EURO-DOLLAR
INTEREST A R B I T R A G E : F R A N K F U R T / L O N D O N ,
FRANKFURT
INTERBANK
LOAN
RATE V S .
ZURICH/LONDON)
LONDON
EURO
DOLLAR
RATE ( C O V E R E D )
IN T E R M S O F
-
INTERBANK
DM_
LOAN RATE
EURODOLLAR
r
DIFFERENTIAL
IVOR F R A N K F U R T
FAVOR E U R O D O L L A R
ZURICH
DEPOSIT
RATE
VS.
LONDON
EURO-DOLLAR
I
RATE ( C O V E R E D )
ISS F R A N C S
IN T E R M s 7 o
EURO DOLLAR
SWISS
DEPOSIT
RATE
DIFFERENTIAL
FAVOR ZURICH
FAVOR E U R O D O L L A R
n
PRICE OF G O L D IN L O N D O N
35.2
35.0
1964
1965
1966
INTEREST A R B I T R A G E , UNITED S T A T E S / C A N A D A
3-MONTH
T R E A S U R Y BILL R A T E S
C A N . F I N . CO. ( P A P E R
CANADA
UNITED S T A T E S
BILL R A T E D I F F E R E N T I A L
AND
FORWARD CANADIAN
DOLLAR
S P R E A D IN FAVOR OF CANADA
VV
F O R W A R D RATE
3-MONTH
COVERED
RATE D I F F E R E N T I A L S (NET I N C E N T I V E S )
'CT.w
DISCOUNT
FAVOR CANADA
PRIME FINANCE PAPER
FAVOR U.S.
FAVOR CANADA
TREASURY BILLS
FAVOR U.S.
1963
1964
1965
1966
INTEREST A R B I T R A G E ,
3-MONTH
TREASURY
NEW
BILL
YORK/LONDON
RATES
U.K. LOCAL AUTHORITY D E P O S I T S
NEW Y O R K
RATE D I F F E R E N T I A L
FORWARD
AND
3-MONTH
STERLING
S P R E A D IN F A V O R OF L O N D O N
FORWARD RATE
RATE
DIFFERENTIAL
WITH
FORWARD
EXCHANGE
COVER
IN F A V O R OF L O N D O N
J
IN F A V O R OF N E W YORK
I I I II 1 I I I I I I 1 I I I I 1 I
(NET
INCENTIVE)
SHORT-TERM
INTEREST
RATES *
U.K.
EURO-DOLLAR
-
LONDON
U.S.
SWITZERLAND
JAPAN
GERMANY
CANADA
U.S
1962
1963
Switzerland (3 month de poui role) and Germany
3 monih role tor U S dollar depot,l» m London
1964
(inlet bunk Iccn k u i e )
1965
1966
LONG-TERM
B O N D
YIELDS
EURO
DOLLAR
BONDS
C A N A D A
N E T H E R L A N D S
U.S.
S W I T Z E R L A N D
1 9 6 2
1 9 6 3
1 9 6 4
* Averoge ol y ieldi lor lour foreign government dollar bonds quoted m London
1 9 6 5
1 9 6 6
S P O T E X C H A N G E RATES - M A J O R C U R R E N C I E S A G A I N S T U . S . D O L L A R
1.6
S W I S S FRANC
1.2
G E R M A N MARK
U.K. STERLING
BELGIAN FRANC
FRENCH FRANC
DUTCH GUILDER
CANADIAN DOLLAR
ITALIAN LIRA
J A P A N E S E YEN
1.2
M
J
1964
S
D
M
)
1965
S
0
M
I
1966
S
3-MONTH
AGAINST
FORWARD
U.S.
EXCHANGE
DOLLARS —NEW
RATES
YORK
PREMIUM
G E R M A N MARK
|Sy/
S W I S S FRANC
POUND STERLING
DISCOUNT-
PREMIUM*
DUTCH GUILDER
FRENCH FRANC
'
C A N A D I A N DOLLAR
OISCOUNT-
AGAINST
Friday figures
POUND
STERLING — L O N D O N
f,
S W I S S FRANC
G E R M A N MARK
U . S . DOLLAR
OISCOUNTM
J
1964
S
D
M
I
1965
S
M
J
1966
S
D
INDUSTRIAL
STOCK
INDICES
300
250
JAPAN
200
CANADA
U.S.
150
100
1964
5win. Done
poronon inouiinoi iioci inoe*
Jnpon inde* of 22 5 indusiriol ond other Hocki troded on ihe Tokyo i k i K a n g t
1965
1966
H. 13
No. 256
July 13, 1966
(all figures per cent per annum)
Upper Panel
Chart 1
(Wednesday,
July 6
)
Euro-$ Deposit
6.00
U.S. certif. of deposit
5.62
Chart 5
(Friday,
Julv 8
Treasury bills:
)
U.K.
U.S.
5.67
4.63
\
+1.04
Spread favor U.K.
Lower Panel
(Friday,
July 8
Finance co. paper:
U.S.
Canada
Hire-purchase paper, U.K.
Chart 2
(Friday,
July 8
)
5.50
6.18
5.97
5.88
6.00
6.44
Treasury bills:
90-day
180-day
Hire-purchase paper
(July 1)
Local-authority deposit
(July 1)
Chart 3
Upper Panel
(Period:
6.19
6.50
6.09
5. 78
June 24-30
)
Interbank loan (mid-point)
6.90
Buro-$ deposit (average)
6. 60
Lower Panel
(Date:
)
June 15
4.19
Zurich 3-mo. deposit
Price of gold
(Friday. July 1
-0. 72
40.32
Chart 6
(Friday,
Julv 8
)
Euro-$ deposits:.
Call
7-day
30-day
Forward pound
Net incentive (U.K. 4-)
35.166
)
U.S.
U.K.
Canada
4.63
5.67
4.?4
Interbank loan rate (German)
(June 24-30)
Euro-$ deposit (London)
Zurich 3-mo. deposit
(Date:
June 15
Japan composit rate
(Date:
Amril 30
)
- 1 1 1
)
7.530
Chart 7
U.S. Gov't. (Wed. , Julv 6
)
Treasury bills:
Canada
U.S.
Spread favor Canada
Forward Canadian $
Net incentive (Canada + )
Canadian finance paper
)
4.94
4.6:<
4. 78
U.K. War Loan (Thura.. July 7)
7.06
German Fed. (Fri.. Julv 1
8.41
)
Swiss Confed. (Fri., Julv 1 )
3,95
Canadian Gov't.
5. 73
)
Chart 4
(Friday, July 8
S,90
(>,19
(Wed.. July8)
Netherlands Gov't perpetual 3%
(Friday. July 1
)
5.90
Buro-$ bonds (Fri., July 1
6.58
)
40.31
0.00
40.31
6.25
For descriptions and sources of data,
see special supplement to H.13,
Number 239, March 16, 1966.
@FedFRASER