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OIVSION OF INTERNATIONAL FINANCE BOARD Of GOVERNOR* OF T H E .,Y JUN 2T Ido'i H .13 No. r June 26, p - "iiv" 3pnc TAL MARKET DEVELOPMENTS ABROAD I. II. I, Germany: Germany Nine Charts on f i n a n c i a l Markets Abroad Money and C a p i t a l Markets During May The money market i n F r a n k f u r t t i g h t e n e d somewhat i n May as i n d u s t r y sought short-term loans t o complete i t s s u b s c r i p t i o n t o t h e f o r e i g n a i d loan and as funds continued to move abroad i n response to i n c e n t i v e s o f f e r e d "by t h e German Federal Bank. The expected t i g h t e n i n g of t h e market i n connection with t h e June 10 major t a x deadline did not m a t e r i a l i z e , and t h e money market was s u r p r i s i n g l y easy during t h e f i r s t h a l f of June, t h e r a t e on day-to-day money f a l l i n g on June lit, t o 1-3/U per c e n t , t h e lowest, r a t e s i n c e October 1959. A major f a c t o r i n the easing was t h e June 1 a c t i o n of t h e German Federal Bank f u r t h e r reducing t h e r a t i o of r e s e r v e s r e q u i r e d of commercial banks against t h e i r r e s i d e n t d e p o s i t s . The Bank has sought to keep s u f f i c i e n t l i q u i d i t y i n the market to r e l i e v e t h e commercial banks,of t h e need t o r e p a t r i a t e funds only r e c e n t l y exported. The policy seems t o be working s u c c e s s f u l l y as t h e commercial banks p r e f e r r e d t o r e discount both Treasury o b l i g a t i o n s and commercial paper r a t h e r than r e p a t r i a t e such funds before the June t a x d e a d l i n e . Foreign; exchange continued t o flow i n t o Germany i n May, but a t a somewhat reduced r a t e . , German commercial banks moved a d d i t i o n a l funds outward t o take advantage of t h e favorable spread between the r a t e s f o r Euro-dollar d e p o s i t s in London and .the lower r a t e s p r e v a i l i n g i n the German money market. The spot d o l l a r remained g e n e r a l l y a t or near t h e lower i n t e r v e n t i o n p o i n t during May but strengthened somewhat i n June following r e p o r t s of t h e Bank f o r I n t e r n a t i o n a l ' Settlements annual meeting and Mr. Jacobsson's Basle speech denying t h e p o s s i b i l i t y of f u r t h e r r e v a l u a t i o n s . There are r e p o r t s t h a t some s p e c u l a t o r s , having r e v i s e d t h e i r e x p e c t a t i o n s of a f u r t h e r r e v a l u a t i o n of t h e mark, a r e l i q u i d a t i n g t h e i r maturing c o n t r a c t s f o r forward DM's. These c o n t r a c t s were entered i n t o s h o r t l y a f t e r the r e v a l u a t i o n of t h e mark when they expected a f u r t h e r r e v a l u a t i o n . The bond market was relatively quiet in May but continued to benefit from the actioris of the Federal' Bank intended to reduce the entire German interest rate structure.. Foreign demand for German bonds remains strong, After marking time in April, the German stock market moved steadily upward during May and continued its advance into June. The June reduction in reserve requirements strengthened the rising tendency which was shared by almost all classes of stocks, but was especially marked in chemical and engineering shares. Continued favorable dividend announcements increased the strength of the market. ! . NOT FOR PUBLICATION DECONTROLLED AFTER SIX MOUTHS NOT FOR PUBLICATION — 2 — A f t e r appearing t o s t a b i l i z e i n e a r l y May, Volkswagen share p r i c e s soared almost phenomenally as r e p o r t s leaked out of a h i g h l y favorable - balance sheet and annual s t a t e m e n t , and t h e C o n s t i t u t i o n a l Court r u l e d against an a c t i o n which had delayed t h e issuance of a d d i t i o n a l shares. The continued r i s e i s s a i d t o be due mainly t o t h e s c a r c i t y of share o f f e r i n g s i n t h e market, a s c a r c i t y which i s expected t o continue as most German i n i t i a l subscribers seem i n c l i n e d t o hold t h e i r shares d e s p i t e t h e w i n d f a l l gain which they could secure by s e l l i n g . - Money Market. During May, r e l a t i v e l y t i g h t conditions g e n e r a l l y — p r e v a i l e d i n t h e German money market, because of t h e continued outflow of bank funds which had developed i n previous weeks as t h e banks responded t o Federal measures designed t o encourage such outflows. With r a t e s of about 3s per cent p r e v a i l i n g i n the London Euro-dollar market f o r 90-day money, as against 3 per cent or l e s s i n the German money market, the German banks were immediately i n v e s t i n g abroad t h e i r accumulation of l i q u i d f u n d s . The decline i n German money-market r a t e s associated with the May $ reduction i n the German Federal b a n k ' s discount r a t e from 3& t o 3 per cent stimulated t h e flow of bank funds abroad. High note and coin c i r c u l a t i o n , and payment of the second tranche of t h e i n d u s t r y f o r e i g n - a i d l o a n , a l s o c o n t r i b u t e d t o t i g h t n e s s i n t h e money market. Because of these f a c t o r s , and a major t a x deadline on June 10, a f u r t h e r t i g h t e n i n g of the market i n June had been expected. To f o r e s t a l l such t i g h t e n i n g t h e Central Council of t h e Federal Bank, a f t e r c o n s u l t a t i o n with Economics Minister Erhard, reduced r e s e r v e r a t i o s ' a g a i n s t r e s i d e n t d e p o s i t s , e f f e c t i v e - J u n e 1, f o r the f i f t h time t h i s y e a r . During most of May, day-to-day money a t around 3 per cent had been c l o s e t o the Federal Bank's discount r a t e l e v e l . Late i n the month i t dropped t o around 2-3/8 - 2 1/2 per c e n t , or about 1/2 p e r cent under the discount r a t e , p a r t l y i n a n t i c i p a t i o n of f u r t h e r easing a c t i o n on the p a r t of t h e Federal Bank. Following t h e lowering of t h e r e s e r v e requirements, money market r a t e s eased markedly, day-to-day money-falling on June 1h t o 1 - 3 A per c e n t , i t s lowest p o i n t s i n c e October 1 9 ^ 9 T h e Federal Bank's p o l i c y of providing s u f f i c i e n t market l i q u i d i t y t o prevent, a r e p a t r i a t i o n from abroad of r e c e n t l y exported s h o r t - t e r m a s s e t s was s u c c e s s f u l as t h e commercial banks p r e f e r r e d t o a v a i l themselves of r e d i s c o u n t i n g f a c i l i t i e s , p r e s e n t i n g f o r r e d i s c o u n t i n g not only open-market s e c u r i t i e s but also commercial p a p e r , r a t h e r than t o r e p a t r i a t e funds, , In e a r l y June, as a r e s u l t of the discount r a t e reduction of May almost a l l maximum i n t e r e s t r a t e s on deposits were reduced by 1/2 a percentage p o i n t . Certain savings deposit r a t e s were reduced by only 1/U per cent as a concession t o t h e savings banks, which urged the need f o r maintaining higher r a t e s on savings d e p o s i t s . As a r e s u l t of t h e s e r e d u c t i o n s , which normally follow a discount r a t e reduction a f t e r c o n s u l t a t i o n s between banking supervisory a u t h o r i t i e s and t h e Federal Bank, a c t u a l bank lending r a t e s are expected t o decline•, i t i s hoped t h a t these lower r a t e s w i l l reduce borrowing abroad by German i n d u s t r y . However, the r e c e n t l y e s t a b l i s h e d p r a c t i c e of ' NOT FOR PUBLICATION NOT FOR PUBLICATION - 3 - German exporters of borrowing, abroad may continue so long as i t i s t o t h e i r advantage to use t h i s means to p r o t e c t themselves against assumed exchange r i s k s . During May the r a t e on commercial c r e d i t s i n general f e l l from a maximum of 8 per cent to 7s per cent. Prime borrowers o f t e n arrange loans at preferred r a t e s below the maxima, but even these p r e f e r r e d r a t e s remain above r a t e s obtainable abroad, some f o r e i g n banks charging around 5 per cent f o r such commercial c r e d i t s . Thus f u r t h e r c r e d i t - e a s i n g measures may s t i l l be necessary i f German commercial borrowing abroad i s to be appreciably reduced. There has been no change since May 5 i n t h e r a t e s a t which the bank i s prepared to s e l l Treasury b i l l s and short-term bonds i n the open market. These r a t e s are down l i per cent since the beginning of the y e a r . 60-90 days Treasury b i l l s From Dec. 2 0 , I 9 6 0 6-month Treasury bonds 3.75 U.00 3.25 2.50 2.38 2.25 3.50 2.75 2.63 2.50 1961 Jan7 Mar. Apr. May 20 23 26 5 - Frankfurt Inter-bank Money Rates Day-to-day money One-month Three-month Lowest r a t e Highest r a t e loans loans 1961 February (monthly range) tt March it April May (weekly range) 1-7 8-15 16-23 2U-31 June (weekly range) 1-7 8-15 2.63 2.50 2.38 2.88 2.88 3.00 2.38 2.38 1.75 U.13 U. 25 3.5o 3.13 3.00 3.13 3.13 2.88 2.50 2 . 7 5 - U.13 3 . 2 5 - U.00 3.00 - 3.25 2.88 - 3.00 2.75 - 3.00 3.00 2.75 - 3.13 2.88 - 3.13 2.75 - 3.00 3 . 8 8 - U.38 3.38 - U.00 3.25 - 3.38 3.00 - 3.25 2.88 - 3.13 3.13 2.88 - 3.25 3.00 - 3.25 3.00 - 3.13 The spread between Treasury b i l l y i e l d s i n the United S t a t e s and Germany s h i f t e d during mid-May to favor s l i g h t l y the U . s . b i l l over t h e German b i l l on a net incentive b a s i s . There was l i t t l e change in the spread between the U.S. b i l l and the German inter-bank loan r a t e with t h e German r a t e s t i l l favored on a net incentive b a s i s (see charts 3 and li); on June 9 t h e r e was an incentive of about 0.72 per cent per annum on the b a s i s of the Frankfurt inter-bank loan r a t e . NOT FOR PUBLICATION NOT FOR PUBLICATION German Inter-bank loan r a t e v s . U.S. b i l l r a t e German Net Spread incentive u'.s. 3 inter-bank b i l l on covered over U.S. loan r a t e r a t e basis 1/ - U- Bundesbank's Treasury b i l l s e l l i n g r a t e v s . U.S. b i l l r a t e Spread Net incentive over 3 mos. U.S. on covered bill bill rate basis l / 1961 April 2 1 May n » June 28 5 12 19 26 2 9 3.38 2.9ii 3.00 3.00 3.13 3.13 3.13 3.07 2.23 2.27 2.18 2.22 2.29 2.39 2.17 2.32 1.15 0.67 0.82 0.79 0.8U 0.7U 0.66 0.72 1.15 0.67 0.82 0.78 0.8U 0.7U 0.66 0.72 2.# 2.38 2.22 2.22 2.22 2.22 2.22 2.22 0.27 0.11 0.07 0.03 —o.oU 0.27 0.11 0.07 0.03 -O.lli -0.22 —0.0I4. -0.1U -0.22 —0.10 —0.10 1 / To encourage c a p i t a l outflow the Bundesbank provides forward d o l l a r s f l a t to German banks. In terms of these a l t e r n a t i v e s , t h e r e was l i t t l e or no incentive f o r a movement of German bank funds to the United S t a t e s . There was, however, an incentive f o r a s u b s t a n t i a l movement of German bank funds i n t o the Eurod o l l a r market i n London. The banks are able t o execute t h e i r t r a n s a c t i o n s i n the Euro-dollar market without a cost f o r forward cover as the German Federal Bank has been w i l l i n g f o r some time to s e l l the cpmmercial banks s h o r t term d o l l a r s a t the spot r a t e and simultaneously buy them back on a forward b a s i s a t the same p r i c e . German money-market r a t e s v s . London Euro-dollar r a t e s Rate f o r U.S. 'Incentive dollars i n favor of London 3 months Day-to-day deposits a t c a l l Euro-dollar money i n money i n Frankfurt i n London c a l l r a t e Frankfurt April May June 7 21 28 2 12 19 26 2 3.19 3.00/ 2.72 2.63 2.82 2.88 2.88 2.72 2.20 3.00 3.00 3.00 2.88 3.00 2.88 2.88 2.88 2.88 • -0.19 0.25 0.25 0.18 *• — —— 0.13 0.38 3.38 3.38 3.38 2.9L 3.00 3.00 . 3.13 3.13 3.13 NOT FOR PUBLICATION Rate f o r U.S. d o l l a r deposits on 3 months basis i n London -3.63 3.63 3.63 3.56 3.56 3.56 3.Wi 3.a 3.U1 Incentive i n favor of London Euro-dollar 3-month r a t e 0.25 0.25 0.25 0.62 0.56 0.56 0.31 0.31 0.31 NOT FOR PUBLICATION - 5 - The f a c t t h a t the banks were able to o f f s e t t h e i r short-term a s s e t s abroad against t h e i r non-resident deposits for- purposes of determining reserve requirements against the l a t t e r (tjhis p r i v i l e g e having been r e s t o r e d e f f e c t i v e April 20) was of major importance i n stimulating the outward movement of f u n d s , and German commercial banks are reported a t the time of the June 10 t a x deadl i n e to have turned i n German money market paper to the Federal Bank r a t h e r than r e p a t r i a t e t h e i r foreign funds. Foreign Exchange. For most of the month, spot d o l l a r s remained near or a t the lower intervention p o i n t . The forward d o l l a r was somewhat s t r o n g e r , s e l l i n g a t times during the.month as high as 3.9738. Ever since the revaluat i o n of the German mark and Dutch g u i l d e r , the d o l l a r and pound s t e r l i n g have sold forward a t discounts against the DM. On several occasions, German newspapers have reported t h a t the German Federal Bank has from time t o time sold forward DM's through a New York agent, the operation being intended as a support f o r the d o l l a r . Following the reports of June lU from Basle on the B . I . 8 . annual meeting and on the Jacobsson speech, spot d o l l a r s strengthened and were quoted a t 3*9711, but 90-day d o l l a r s were a t a 1.72 per cent discount. The i n t e r e s t of the German commercial banks i n money exports, which are continuing i n June, probably also aided the spot d o l l a r . A f u r t h e r f a c t o r iq the l i q u i d a t i o n on the p a r t of speculators of forward DM c o n t r a c t s . Following the revaluation of the mark and guilder, speculators bought marks forward i n the expectation of a f u r t h e r revaluation of the mark. Apparently many speculators are not now renewing t h e i r forward DM contracts when they mature. DM-Dollar middle r a t e par: April %8 May 5 " 12 " 19 June » " 2 9 1U " 26 - (DM luOO = $1) 3.9701 3.9700 3.9700 3.9701 3.9701 3.9701 3.9701 3.9711 Bond Market. Although r e l a t i v e l y quiet i n May, the bond market continued t o b e n e f i t from the continued e f f o r t s of the Federal Bank to get s h o r t - and long-term i n t e r e s t r a t e s down. The p r e v a i l i n g r a t e i n the German c a p i t a l market i s now around per cent with the continuing promise of some additional lowering of i n t e r e s t r a t e s leading t o a f u r t h e r modest r i s e i n the prices of major i s s u e s . Foreign demand f o r German bonds remains strong i n response to the favorable yield of German bonds over foreign bonds and the prospect f o r f u r t h e r c a p i t a l gains, and continues as an important f a c t o r i n the inflow of funds i n t o Germany. During May the average e f f e c t i v e y i e l d on long-term government bonds f e l l modestly below the April l e v e l of roughly 5*75> per cent (March l e v e l 5>.9 per c e n t ) . During, the month, several s u b s t a n t i a l mortgage i n s t i t u t i o n s r a i s e d the issue p r i c e of t h e i r mortgage bonds on the Frankfurt exchange by a f u l l p o i n t . There were no major f l o t a t i o n s of public or i n d u s t r i a l bonds as i s s u e r s anticipated a f u r t h e r f a l l i n long-term r a t e s . NOT FOR PUBLICATION NOT FOR PUBLICATION - 6 - Yield of Fixed-Interest-bearing s e c u r i t i e s (per cent) ,4 I960 July Oct. Dec. 1961 Jan. Feb. Mar. - Apr. May ( e s t . ) Mortgage bonds 6.5 ./ 6.U 6.2 6.2 6.2 6.1 5.9 5.8 Industrial bonds — 6.5 6.1 6.1 , 5.8 5.7 5.8 5.7 5.6 Loans of public authorities 6.7 6.3 6.1 6.1 6.0 5.9 5.7 5.6 A new World Bank issue i s expected s h o r t l y on the German market. The loan w i l l t o t a l IM 5>0 million ($12.5 m i l l i o n ) , but the exact time and conditions"of issue are not yet known. A 5 per cent nominal i n t e r e s t r a t e has been suggested as appropriate a t t h i s time to the German c a p i t a l market. I t has been observed, moreover, t h a t the World Bank could not a f f o r d t o pay a higher r a t e i n view of lower r a t e s prevailing elsewhere. Observers have suggested t h a t the Bank*s f l o t a t i o n in Germany i s explained, a t l e a s t i n p a r t , by the desire to encourage f u r t h e r exports of German c a p i t a l . West German bankers r e c e n t l y i n Tokyo completed t h e i r discussions with Japanese bankers regarding the issue of Japanese bonds in Deutsche marks to finance the development of the Osaka harbor. Originally expected in June, the loan has now been postponed, p a r t l y to permit f u r t h e r discussions on t e c h n i c a l d e t a i l s but also t o await a period when the German c a p i t a l market becomes, l e s s t i g h t and i n t e r e s t costs lower. Stock Market. The German stock market picked up momentum i n May following a quiet April when the market marked time. The lowering of the German Federal Bank's discount r a t e on May 5, the continuing trend toward lower i n t e r e s t r a t e s , and f u r t h e r announcements of dividends modestly above t h e i r I960 l e v e l s stimulated the market. Further investment by foreign buyers—based more, i t now appears, on the continuing strong i n d u s t r i a l boom in Germany than on expectations of a f u r t h e r DM revaluation—also strengthened the market. The f u r t h e r reduction in the minimum reserve requirements of the banks against resident d e p o s i t s , e f f e c t i v e June 1, gave additional impetus t o the market r i s e , and trading i n shares during the f i r s t days of June was e s p e c i a l l y heavy. As in recent months, chemical and engineering shares were p a r t i c u l a r l y strong, as were selected motor shares. NOT FOR PUBLICATION NOT FOR PUBLICATION - 7 - Frankfurt Allgemeine Zeitung Index of I n d u s t r i a l Share Prices : " (Dec. 31, 195U - 100) "~~ 1961 Feb.. Mar. Apr. May 28 30 28 5 12 19 26 June 2 9 1*32.96 1(17.29 U26.88 l*3lt.01 #7.97 li63.0lt 1)65.69 U67.15 U72.20 The phenomenal r i s e i n Volkswagen shares has "been a highlight of the German stock exchanges i n recent weeks. More than a million and a half Germans applied f o r Volkswagen shares when the company was denationalized. With only DM 360 million worth of shares a v a i l a b l e , applications f o r DM 667 million worth of shares ($167 m i l l i o n ) , nominal value, were received. Applicants, who were e n t i t l e d to request up t o f i v e shares, received two, with one out of every three applicant receiving t h r e e shares. Third shares were allocated by lot* Although a r i s e i n share value from the sale p r i c e of DM 350 t o between DM 6OO700 was expected, t h e h e c t i c speculative a c t i v i t y of recent weeks has come as quite a surprise t o the a u t h o r i t i e s , who had not intended t h a t the shares become highly speculative. The Volkswagen issue was part of a continuing government e f f o r t to arouse greater public acceptance of investing by means of issuing stock i n some f e d e r a l l y controlled companies. Sales were limited exclusively to individuals and families at the lower income l e v e l s . Baiks, funds, and other c r e d i t i n s t i t u t i o n s were not e l i g i b l e to buy the shares, and only limited speculation was foreseen. However, a f t e r a pause in early May at around DM 700 per share, the stock was quoted as high as EM 1000 by the middle of the month. By the end of the month the stock was a t DM 1C£0 per share a f t e r having been quoted on several occasions as high as DM 1100. As of mid-June the shares were s t i l l being quoted around DM 105»0. Several f a c t o r s influenced the heavy r i s e . Reports of a highly favorable balance sheet and annual report leaked out before publication. The Constitutional Court approved the share d i s t r i b u t i o n i n turning down an action t o prevent issuance on the b a s i s t h a t l i m i t a t i o n to c e r t a i n income groups was discriminatory. F i n a l l y , foreign buyers i n t e n s i f i e d the demand f o r shares. The management of Volkswagen, responding t o the i n t e r e s t shown by f o r e i g n i n v e s t o r s , expressed the desire t h a t the shares be traded on foreign stock exchanges as soon as p o s s i b l e . The introduction of Volkswagen and-other German shares on the London stock market may be f a c i l i t a t e d by a decision of the B r i t i s h Stamp Duty Office ruling t h a t depositary r e c e i p t s issued i n London i n respect to German shares would be subject to a lower r a t e than was expected. There i s evidence, however, t h a t the desires of the German a u t h o r i t i e s f o r a broadened share market are not t o be e n t i r e l y disappointed by speculative a c t i v i t y i n Volkswagen shares on German and foreign exchanges. The sharp upward movement i n the p r i c e i s a t t r i b u t a b l e p r i n c i p a l l y t o t h e extreme thinness NOT FOR PUBLICATION NOT FOR PUBLICATION - 8 - of the market, the number of Volkswagen shares available f o r trading on the German exchanges- being very l i m i t e d . This s c a r c i t y i s heightened by the tendency on the p a r t of the great majority of German holders to r e t a i n t h e i r shares rather than s e l l even a t the i n f l a t e d p r i c e . As a f u r t h e r support of the German stock market, the Berliner • Lombardkasse A.G., founded i n Berlin in 1923 by the big banks with branches, i n conjunction with c e r t a i n p r i v a t e bankers, i s shortly t o resume operations. I t s purpose i s t o make funds available, on terms favorable to stockbrokers, in the form of loans against s e c u r i t i e s . The Board of the Bank w i l l meet in Frankfurt and the operations of the firm are t o be nationwide, "Berliner* being henceforth dropped from the name. I t i s "expected t h a t the ' f i r m ' s operations w i l l a s s i s t stock exchanges to "iron out n market f l u c t u a t i o n s to a greater degree than heretofore has been p o s s i b l e , European Section. II. Nine Charts on Financial Markets Abroad Chart Chart Chart Chart Chart Chart Chart Chart 1 2 3 U5> 6 7 8 - I n t e r e s t Arbitrage U.S./Canada I n t e r e s t Arbitrage New York/London I n t e r e s t Arbitrage New York/Frankfurt I n t e r e s t Arbitrage Frankfurt/London Short-term I n t e r e s t Rates Long-term Bond Yields I n d u s t r i a l Stock Indices Major Currencies i n Terms of Spot United States Dollar Chart 9 - 3-month Forward Rate—London Quotations NOT FOR PUBLICATION 1 f 'Thursday Iii THREE-MONTH TREASURY 1ILL RATES 1 U N I T E * STATES RATE DIFFERENTIAL A N D FORW IAN i $ i 4 1 ; F O I W A t P tATE lliceeel - j RATE DIFFERENTIAL W I T H / FORWARD v' EXCHANGE COVER NET INCENTIVE IN F A V O I O f C A N A f t A ' + , its* N ? •Chart 2 INTEREST A R B I T R A G E , NEW YORK / LONDON Friday figures 3 — M 3NTH P' 1 TR E A S U tY BILL RATES X l o k d c IN - Kh 11 i i r, r A T ^ . \L S R X Z V NEW TOM. \ ! U -L- 1 11 11 11 11 11 1 11 11 1 1M RATE D I F F E R E N T I A L A N D 3-MONTH FORWARD STERLING ifttkD RATE D I F F E R E N T I A L FORWARD - Sx,W IN FAYOR OF LONDON WITH EXCHANGE COVER IN FAVOR OF N E W Y O R K / $ J INTEREST A R B I T R A G E , N E W YO 3 - M O N T H TREASURY BILL RATES A N D GERMAN 3-MONTH INTERBANK GERMAN INTERBANK LOAN RATES 3-MONTH LOAN RATE GERMAN 3 - M O N T H R E A S U R Y BILLS 0 . S . T R E A S U R Y BILLS RATE D I F F E R E N T I A L A N D F O R W A R D D E U T S C H E M A R K S P R E A D IN F A V O R OF F R A N K f l i l f ! V | 5 k F O R W A R D RATE D I S C O U N T ( - ) RATE D I F F E R E N T I A L W I T H F O R W A R D E X C H A N G E C O V E R NET I N C E N T I V E : AVOR OF F R A N K F U R T ( + ) IN F A V O I Not*: '6R N E W Y O R K <-> Special forward dollar role (either flat or premium on t p o l j available to German commercial bank*. P«> a w m i INTEREST ARBITRAGE, FRANKFURT/LONDON ^ r l d o y figure) 3-MONTH — AND RATE TREASURY LENDING BILLS RATES—• DIFFERENTIAL AND FORWARD GERMAN PREMIUM + 1(ATE DIFFERENTIAL WITH STERLING \ OR DISCOUNT — FORWARD EXCHANGE COVER $ D SHORT-TERM INTEREST RATES * 7 CANADA J 1951 * Note: 3 month Ireotury bill rctei (or oil countries except Jopon (3monfh interbank deposit rate) and Switzerland (.3-month deposit rote). i INDUSTRIAL STOCK INDICES * 1958 = 100; A/V SWITZERLAND / 250 1958 Note: Jopan: Index of all ilocki Iroded on Tokyo exchange. 1961 MAJOR CURRENCIES IN TERMS OF THE SPOT U. S. DOLLAR Above SWISS par rune 1.2 DUTCH GUl'lDIR ^ Above MUNCH'Mkc . ITALIAN 11.8 A JAPANESE YIN ^ A 'BELGIUM FRANC . par ' 3-MONTH FORWARD_RATJES^LONDON QUOTATIONS SWISS FBANC FRENCH F « A » G - | < J $ 0 17
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