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1 DIVISION O F I N T E R N A T I O N A L F I N A N C E BOARD O F OOVERNORS F E D E R A L R E S E R V E SYSTEM MAR 6 1963 No. 97 March 1 , 1963. ^CAPITAL MARKET DEVELOPMENTS ABROAD I. II. III. I. Japan India Nine Charts on F i n a n c i a l Markets Abroad Japan: Money and C a p i t a l Markets i n January - In January and February, Japan took s t e p s t o reduce t h e r a t e of short-term, f o r e i g n borrowing which has been i n c r e a s i n g i n r e c e n t months. Japanese f o r e i g n exchange banks were asked t o lower t h e maximum r a t e of i n t e r e s t p a i d on f o r e i g n exchange d e p o s i t s by 1 - 1 / 8 p e r c e n t a g e p o i n t s . This would mean a r e d u c t i o n i n t h e suggested maximum r a t e on a three-month d e p o s i t from 5 - 1 f h t o It-1/8 p e r c e n t . The Japanese balance of payments, as measured on an exchange t r a n s a c t i o n s b a s i s (not s e a s o n a l l y a d j u s t e d ) , showed net s h o r t - t e r m c a p i t a l r e c e i p t s of $105 m i l l i o n f o r January as compared t o a monthly average outflow i n t h e f o u r t h q u a r t e r of 1962 of $25 m i l l i o n . In January and February, Japan f l o a t e d $hh m i l l i o n i n s e c u r i t y i s s u e s in the United S t a t e s . During t h e f i s c a l y e a r beginning A p r i l 1, 1963, Japan expects t o borrow on a long-term b a s i s about $200 m i l l i o n i n t h e - U n i t e d S t a t e s and $35 m i l l i o n i n Germany and S w i t z e r l a n d . In r e c e n t months, t h e t r a d e d e f i c i t has widened c o n s i d e r a b l y compared t o t h e r e l a t i v e l y small d e f i c i t in t h e t h i r d q u a r t e r l a s t y e a r , and t h i s adverse d e v e l opment may account i n p a r t f o r an i n c r e a s e d d i s c o u n t a g a i n s t t h e yen in t h e forward f o r e i g n exchange market. While i n t e r n a t i o n a l r e s e r v e s continued t o r i s e i n January i n s p i t e of $50 m i l l i o n i n debt repayment t o t h r e e U. S . banks, t h i s was s o l e l y because of the l a r g e s h o r t - t e r m c a p i t a l i n f l o w . Money market c o n d i t i o n s eased i n December a t t h e same r a t e as a y e a r e a r l i e r . i n t e r e s t r a t e s dropped i n November f o l l o w i n g discount r a t e i n both October and November. market recovered f u r t h e r from a two-year low l e v e l throughout February. January and bank c r e d i t expanded i n The g e n e r a l l e v e l of commercial bank a cut in t h e Bank of J a p a n ' s b a s i c In January and February t h e stock l a s t October and remained a t a high Money market. C o n t r a c t i o n a r y developments i n t h e money market in January more than o f f s e t expansionary f a c t o r s . Bank l i q u i d i t y was i n c r e a s e d by a r e d u c t i o n of ¥292 b i l l i o n i n bank n o t e s i n c i r c u l a t i o n , but t h i s was more t h a n o f f s e t by n e t Treasury r e c e i p t s of ¥233 b i l l i o n , a r e d u c t i o n i n Bank of Japan government bond h o l d i n g s of ¥229 b i l l i o n , and a decrease i n Bank of Japan l o a n s and d i s c o u n t s of ¥53 b i l l i o n . OFFICIAL USE ONLY •DECONTROLLED AFTER SIX MONTHS OFFICIAL USE ONLY / "interest r a t e s . A f t e r r i s i n g s t e a d i l y from a low in June 1961, the average / / / i n t e r e s t r a t e f o r loans and discounts f e l l s u b s t a n t i a l l y i n November t o 8.19 per cent from a l e v e l of 8.2L per cent i n September and October. (See t a b l e below). This decline r e f l e c t e d a reduction of 0,72 percentage p o i n t s in the Bank of Japan's b a s i c discount r a t e in October and November, A f u r t h e r decline i n t h e r a t e appears l i k e l y . Average Monthly I n t e r e s t Rates on Bank Loans and Discounts I960 1959 1961 March June September December 1 / November 8.18 8.28 8.06 8.11 9,21 8.22 b.lii 8.08 7.92 7.88 8.00 8.20 1962 8.22 8.23 8.19 y C a l l money r a t e s eased s u b s t a n t i a l l y i n January a f t e r firming in December. The r a t e f o r loans c a l l a b l e a t a d a y ' s n o t i c e f e l l to 8,03 per cent in January compared t o 11.68 per cent i n December. In p a r t t h i s was due t o an outflow of funds from the Central Cooperative Bank of Agriculture and Forestry and t h e Central Bank f o r Commercial and I n d u s t r i a l Cooperatives. Bank loans and d i s c o u n t s . Bank c r e d i t rose 2.5 per cent in December 1962, the same as a year e a r l i e r . The l a t e s t r i s e , however, r e f l e c t e d a 3.8 per cent i n c r e a s e in loans and a 2.6 per cent decline in holdings of s e c u r i t i e s in c o n t r a s t to a general r i s e i n l o a n s , d i s c o u n t s , and s e c u r i t i e s a y e a r e a r l i e r . The d e c l i n e in s e c u r i t y holdings r e f l e c t s t h e purchase by t h e Bank of Japan on December 3 of ¥50 b i l l i o n in government-guaranteed s e c u r i t i e s from t h e commercial banks i n accordance with t h e p o l i c y adopted l a t e in 1962 t o reduce commercial bank dependence on borrowing from the Bank of Japan. Deposit l i a b i l i t i e s rose 5.9 p e r cent i n December compared to a 3.9 per cent r i s e a year e a r l i e r . The proportion of bank loans and discounts extended f o r purchases of e q u i p merit, which had reached a peak of 17.L p e r cent i n t h e second quarter of 1962, f e l l to 17.0 p e r cent in December, t h e lowest l e v e l f o r the y e a r . Bond market. New i s s u e s of bank debentures in December were ¥78 b i l l i o n , up ¥3 b i l l i o n from November and ¥22 b i l l i o n higher than t h e y e a r ' s low point in May. New i s s u e s of i n d u s t r i a l bonds i n December were ¥19 b i l l i o n , unchanged from the November l e v e l , and new i s s u e s of public corporation bonds were up ¥ 1 b i l l i o n i n December t o a l e v e l of ¥25 b i l l i o n . T o t a l new i s s u e s in December were ¥122 b i l l i o n , second only t o the h i g h e s t volume f o r the year i n March of ¥129 b i l l i o n . ^ " Average y i e l d s on most bonds and debentures remained unchanged in December from t h e l e v e l s since the f i r s t of t h e y e a r . Yields on i n d u s t r i a l bonds eased from 7oii91 per cent in November t o 7.U80 i n December. Stock market. Stock p r i c e s rose in January and the f i r s t eleven days of February, s t a b i l i z i n g a t a high l e v e l during the r e s t of February. E a r l i e r i n t h e f o u r t h q u a r t e r stock p r i c e s recovered much of the ground l o s t during t h e t h i r d q u a r t e r . From a low f o r the year on January 7 of ¥1,391, the stock p r i c e index rose 9 per cent t o a peak of ¥1,513 on February 11„ OFFICIAL USE ONLY x OFFICIAL USE ONLY - 3 - Dow Jones Average of 225 Stocks F i r s t Section of Tokyo Stock Exchange Dec. 26 Jan. 9 16 23 30 . ¥1,132 '1,U21 1,UXU 1,U5L 1,1*52 Feb* 6 13 20 27 ¥1,195 1,197 l,b9U 1,190 , 1962 High Low ¥1,590 1,216 1963 High Low ¥1,511 1,391 Foreign t r a d e . The s e a s o n a l l y adjusted, t r a d e d e f i c i t widened i n January t o $6U m i l l i o n compared t o $37 m i l l i o n in December and an average monthly d e f i c i t i n . t h e f o u r t h q u a r t e r of $5U m i l l i o n . January e x p o r t s were down 6 per cent from December and imports were up 1 p e r c e n t . The s e a s o n a l l y a d j u s t e d t r a d e f i g u r e s (monthly, or monthly a v e r a g e s , on a customs b a s i s i n m i l l i o n s of d o l l a r s ) i n t h e t a b l e below are based on s e a s o n a l adjustment f a c t o r s computed by t h e Bank of Japan under t h e U. S. Census method. Trade Exports Imports Balance I II III IV October November December 371 U09 U3U U21 . h2li Uo5 U35 U75 U92 U6U 468 -121 - 57 - 13 - 51 -68 - 59 - 37 . January lt09 U73 - 6U 192 i-t-66 hhl Exchange r e s e r v e s and c a p i t a l f l o w s . I n t e r n a t i o n a l r e s e r v e s r o s e $ij.3 m i l l i o n i n January t o $1,8%. m i l l i o n in s p i t e of a s p e c i a l debt repayment t o U« S. banks of $50 m i l l i o n . Japan has now r e p a i d t h e f u l l $200 m i l l i o n borrowed between November 1961 and February 1962 from t h r e e American banks and i s scheduled t o repay an a d d i t i o n a l $112 m i l l i o n to seven U. S. banks i n t h e March-July p e r i o d t h i s y e a r . The balance of payments, a s measured on an exchange t r a n s a c t i o n s b a s i s , r e g i s t e r e d a d e f i c i t on c u r r e n t account (not s e a s o n a l l y a d j u s t e d ) of $86 m i l l i o n i n J a n u a r y . The d e f i c i t , however, was more than o f f s e t by net s h o r t - t e r m c a p i t a l r e c e i p t s of $105 m i l l i o n and net long-term c a p i t a l r e c e i p t s of $U m i l l i o n . With net r e c e i p t s of $20 m i l l i o n under t h e e r r o r s and omissions i t e m , the o v e r a l l balance r e g i s t e r e d a s u r p l u s of $U3 m i l l i o n . The heavy i n f l o w of s h o r t - t e r m c a p i t a l r e f l e c t e d s u b s t a n t i a l Japanese borrowing of E u r o - d o l l a r s during t h e month of January, S e v e r a l a c t i o n s were taken by t h e Japanese a u t h o r i t i e s i n January and February t o d i s c o u r a g e f o r e i g n s h o r t - t e r m borrowing. In January, Japanese f o r e i g n exchange banks were r e q u e s t e d t o lower by 5/8*s of a percentage p o i n t t h e r a t e of OFFICIAL USE ONLY OFFICIAL U3B ONLY i n t e r e s t paid on short-term f o r e i g n exchange d e p o s i t s . On February 20, a f u r t h e r cut of one-half of a percentage point was a l s o recommended by the Minister of Finance, thus reducing t h e maximum r a t e f o r three-months deposits t o L - l / 8 per cent„ E a r l i e r on January 11, f o r e i g n exchange banks were required to maintain a reserve of 35 per cent i n l i q u i d foreign a s s e t s against s p e c i f i e d short-term foreign l i a b i l i t i e s in excess of the l e v e l outstanding in December 1962. A b a s i c 20 per cent reserve r e q u i r e ment continues to remain in e f f e c t a g a i n s t those l i a b i l i t i e s outstanding in December, Japanese s h o r t - t e r n l i a b i l i t i e s t o the United S t a t e s rose $71 million in December, according t o preliminary r e p o r t s . Revised data on t h e s e l i a b i l i t i e s i n d i c a t e t h a t a.peak was reached in September (see t a b l e below) r a t h e r than in March, as i n d i c a t e d by t h e previous d a t a , Jan. Feb. Mar. Apr. May June a7 r/ 1959 I960 1961 168 175 20L 22L 212 260 #2 372 k20 166 LBS L97 8?S 952 1,069 1,159 1,196 1,272 1962 r/l,55L r/l,6Ll r/l,73l r/1,723 r/1,711 r/1,709 1959 I960 1961 256 269 262 262 275 J2U 586 628 660 693 711 806 l,3kl 1,335 1,288 1,281 1,292 r/l,L76 July Aug. Sept. Oct. Novc Dec. 1962 j/1,757 r/l,76k r/l,766 1,709 a/1.660 a,1.731 Preliminary e s t i m a t e . Revised. NOTE: Data since December 196l include r e p o r t s of c e r t a i n banks not previously included. The inclusion of these banks increased t h e reported f i g u r e in December 1961 by $52 m i l l i o n . In January and February, Japan placed $kh million in s e c u r i t y i s s u e s in the United S t a t e s . These included a $22.5 million i s s u e by t h e Japan Development Bank and a $6.2 million i s s u e of American Depository Receipts shares by Nippon E l e c t r i c Company. For t h e Japanese f i s c a l year beginning April 1, Japan plans t o place overseas $125 m i l l i o n i n f o r e i g n i s s u e s . These include $20 m i l l i o n in Nippon Telegraph and Telephone bonds, $20 million of Tokyo municipal bonds, and $80-85 m i l l i o n in various government-guaranteed i n d u s t r i a l bonds. In a d d i t i o n , i t i s estimated t h a t p r i v a t e companies w i l l f l o a t $100 m i l l i o n i n s e c u r i t i e s i n t h e United S t a t e s during t h e f i s c a l y e a r , and Japan i s scheduled to r e c e i v e a $36 m i l l i o n loan from the I.B.R,D. f o r new railway and highway c o n s t r u c t i o n . Japan a l s o plans t o borrow $25 m i l l i o n in Germany and $10 million in Switzerland. The M i n i s t r y of Finance r e c e n t l y r e l e a s e d the following data on foreign investment in Japan? Bond Issues Floated Overseas Acquisition of Stocks Acquisition of Other Assets OFFICIAL USE ONLY 1962 $136 m i l l , 125 m i l l . 277 m i l l . • ~196l $ 54 m i l l , IIP m i l l , 38h n i l l o ' OFFICIAL USE ONLY Foreign exchange. Although t h e exchange r a t e in the spot market remained unchanged a t t h e o f f i c i a l support l e v e l during January and the f i r s t h a l f of February, the yen weakened i n t h e forward market during t h e same p e r i o d . Between January k and February 5, t h e forward discount rose from 0.78 per cent t o 2.17 per cent and remained at t h i s discount through mid-February. (See t a b l e below). The weakening of t h e yen may be a t t r i b u t a b l e i n p a r t t o t h e worsening t r a d e balance in recent months and p a r t i c u l a r l y i n January. Customer's T. T. Exchange Rates of Bank of Tokyo i n Tokyo Yen-dollar spot middle rate Three-month forward middle rate Forward discount i n p e r cent per annum December 28 358.90 359*60 .78 January U 11 18 25 358.90 358.90 358.90 358.90 359.60 359.80 359.95 360.15 .78 1.00 1.1? 1.73 1 8 15 358.90 358.90 358.90 360.85 360.85 360.85 , February OFFICIAL USE ONLY ' .2.17 2.17 2.17 OFFICIAL USE ONLY II. India; - 6 - Money and C a p i t a l Markets during January 1963 Indian money and c a p i t a l markets d u r i n g January were s t i l l c o n s i d e r a b l y i n f l u e n c e d by p a s t governmental a c t i o n s and t h e p r o s p e c t of new measures t o s t r e n g t h e n t h e d e f e n s e s of t h e c o u n t r y . Tight c r e d i t c o n d i t i o n s were r e f l e c t e d i n t h e market f o r s h o r t - t e r m money, where r a t e s remained a t high l e v e l s • N e v e r t h e l e s s , t h e amount of bank c r e d i t continued t o i n c r e a s e s u b s t a n t i a l l y . The c o u n t r y ' s i n t e r n a t i o n a l monetary r e s e r v e s remained a t a low l e v e l . The gold t r a d e was completely d i s o r g a n i z e d as t h e r e s u l t of new r e g u l a t i o n s which c o n s i d e r a b l y r e s t r i c t t h e scope of t h e l e g a l gold market. No q u o t a t i o n s on gold p r i c e s have been a v a i l a b l e s i n c e t h e regulations were announced on January 10. P r i c e s i n t h e stock markets began t o f a l l , a f t e r a period of s t a b i l i t y , as r e g u l a t i o n s on minimum p r i c e s were r e l a x e d . Money m a r k e t . The r a t e f o r d a y - t o - d a y money was s l i g h t l y lower i n Januar">-^. than i n December, but h i g h e r than i n January 1961. (See Table l ) . This c o u n t e r s e a s o n a l d e c l i n e i s due t o t h e v e r y high r a t e reached during t h e f i r s t h a l f of December - 5.U8 per cent on December lU• For mid-December t o January li, t h e r a t e f o r s h o r t - t e r m money d e c l i n e d by almost 1 p e r c e n t . Through January, t h e r a t e i n c r e a s e d s t e a d i l y and by.February 8, i t reached 5.83 per c e n t , one of t h e h i g h e s t levels in recent years. Table 1 I n t e r - b a n k C a l l Money Rate i n Bombay ( i n per cent per annum) Monthly average Nov. 1962 Dec.. 1962 DeC 1962 J a n . 1963 3.20 5.03 j £/, L.85 y Nov. 1961 Dec. .ucv » 1961 J.7UJL J a n . 1962 U.03 U.07 14.. v | U.U9 S e l e c t e d Dates Jan. a/ h U.63 25 5.10 11 18 U.81 L.86 Average of F r i d a y s . Gold market. The I n d i a n gold market has been i n a very d i s o r g a n i z e d s t a t e f o l l o w i n g t h e January 10 announcement by t h e Government of i t s Gold Control R u l e s . Since t h a t d a t e , t h e r e has been no o f f i c i a l p r i c e q u o t a t i o n of gold t r a n s a c t i o n s . U n o f f i c i a l r e p o r t s i n d i c a t e t h a t t h e p r i c e of gold b u l l i o n f e l l from t h e rupee e q u i v a l e n t of $68.13 t o about $55.50 per ounce (converted a t p a r v a l u e ) immediately upon d i s c l o s u r e of t h e Government's a c t i o n . - By t h e end of January, gold was r e p o r t e d to be s e l l i n g a t about $ 6 5 . t o 62 per ounce. This p r i c e i s about 25 per cent l e s s t h a n t h e r e c o r d high reached a t the end of August 1962. OFFICIAL USE ONLY =» 7 " OFFICIAL USE ONLY The Indian a u t h o r i t i e s have extended t h e time l i m i t f o r the d e c l a r a t i o n on non-ornamental gold from February 8 to February 28. They have a l s o taken a d d i t i o n a l measures t o reduce gold smuggling» As of mid-February, i n d i v i d u a l s caught with gold (and o t h e r goods) which a r e suspected of having been brought i n t o I n d i a - i l l e g a l l y a r e t o be considered g u i l t y of smuggling, u n l e s s t h e y can prove o t h e r w i s e . One r e p o r t e d r e s u l t of t h e new gold r u l e s has been an i n c r e a s e d purchase of t h e Government's 6 j per c e n t Gold Bonds. The Government has s t a t e d t h a t p u r c h a s e r s of t h e s e bonds, which a r e bought with gold and redeemable i n rupees a i ihe i n t e r n a t i o n a l gold p r i c e , w i l l not be r e q u i r e d t o d i s c l o s e t h e manner i n which t h e y o b t a i n e d t h e gold. Stock market. I n d i a n stock p r i c e s d e c l i n e d during J a n u a r y , as t h e minimum p r i c e r e g u l a t i o n s s e t by t h e v a r i o u s stock exchanges were g r a d u a l l y r e l a x e d . (See Table 2 ) . By February 9 , t h e stock index had f a l l e n to 165.1;, which was i t s lowest l e v e l s i n c e November I960 and i s b«3 p e r c e n t l e s s than a t t h e end of 1962. Table 2 P r i c e Index of Variable Dividend I n d u s t r i a l S e c u r i t i e s : All India (1952-53 = 100) Monthly Average Nov. 1962 Dec. 1962 J a n . 1963 170.5 171.lt 171-1 Nov. 1961 Dec. 1961 J a n . 1962 186=9 l81n3 187 A S e l e c t e d Dates Jan. 5 12 19 26 172.5 171.9 171ol 168.7 Banking developments. The Reserve Bank of I n d i a ' s r a i s i n g of i t s basicd i s c o u n t r a t e from U t o h 1/2 p e r cent on January 3 does not appear t o have s e r i o u s l y a f f e c t e d t h e e x t e n s i o n of bank c r e d i t . During J a n u a r y , bank c r e d i t r o s e by t h e same s i z e a b l e amount as i n t h e previous month„ (See Table 3)» P a r t of t h i s expansion was made p o s s i b l e by t h e continued r e d u c t i o n in t h e scheduled banks' h o l d i n g s of government s e c u r i t i e s . The d e c l i n e i n cash and balances with t h e Reserve Bank was much l e s s than a y e a r e a r l i e r , and mainly r e f l e c t e d the unwinding of year-end window-dressing o p e r a t i o n s . T o t a l d e p o s i t s r o s e i n J a n u a r y , but a t a lower r a t e than a y e a r ago. OFFICIAL USE ONLY OFFICIAL USE ONLY Table 3 Scheduled Banks: Monthly Changes i n Deposits and P r i n c i p a l Assets ( i n m i l l i o n s of rupees) MAIN A S S E T S Per Cent Bank Per Cent Gov't Per Cent Cash and Balances Per Cent Deposits Change Credit Change S e c u r i t i e s Change with Reserve Bank Change 1962 J a n . Nov. Dec. 1963 J a n . +271 -110 - 5 +113 +107 +1.5 -0.5 0,0 -122 +U8I4 +3.2 -0.9 +3.5 +163 -109 -U66 +2.8 -1.5 -6.6 -296 -115. +157 -19.1 - 9.0 +13.5 +0.5 +U95 +3.5 - 39 -0.6 - 81 - 6.1 Exchange r e s e r v e s . The i n t e r n a t i o n a l monetary a s s e t s of t h e Reserve Bank of I n d i a continued t o remain a t record low l e v e l s during January (See Table It). At t h e end of t h e month, r e s e r v e s were $89 m i l l i o n (16 p e r c e n t ) l e s s t h a n a t the end of January 1962. Table k I n t e r n a t i o n a l Monetary Reserves ( i n m i l l i o n s of d o l l a r s - l a s t Friday of month) Month Nov. 1962 Dec. 1962 J a n . 1963 ./ UUU U51 hhQ Nov. 1961 Dec. 1961 J a n . 1962 55U 563 £37 S e l e c t e d Dates Jan. 5 12 U5l h$2 19 ^Wi8 26 " L18 A s i a , A f r i c a and L a t i n America S e c t i o n III. Nine Charts on F i n a n c i a l Markets Abroad Chart Chart Chart Chart Chart Chart Chart Chart 1 2 3 h 5 6 7 8 I n t e r e s t A r b i t r a g e , United States/Canada I n t e r e s t A r b i t r a g e , New York/London I n t e r e s t A r b i t r a g e f o r German Commercial Banks I n t e r e s t A r b i t r a g e , Frankfurt/London S h o r t - t e r m I n t e r e s t Rates Long-term Bond Yields I n d u s t r i a l Stock I n d i c e s Soot Exchange Rates - M a j o r Currencies Against U. S. D o l l a r Chart 9 - 3-month Forward Exchange Rates - OFFICIALESE ONLY INTEREST Thuridoy ARBITRAGE, S T A T E S / C A N A D A figures 3-MONTH RATE UNITED TREASURY DIFFERENTIAL BILL AND RATES FORWARD CANADIAN F O R W A R D RATE RATE DIFFERENTIAL WITH FORWARD NH I960 1961 EXCHANGE DOLLAR \ COVER I N C t N i l V I I N F A V O R OF C A N A D A + 1962 1t»3 INTEREST Friday ARBITRAGE, NEW Y O R K / L O N D O N figures 3-MONTH RATE TREASURY DIFFERENTIAL BILL AND RATES 3-MONTH FORWARD STERLING _i_L WITH Li FORWARD EXCHANGE COVER _Li I960 1961 1962 - 1963 INTEREST ARBITRAGE 3-MONTH -EURO FOR TREASURY DOLLAR GERMAN BILLS, DEPOSIT COMMERCIAL INTERBANK RATES I LENDING BANKS RATE I GERMAN INTERBANK I LOAN RATE SJ i \/V' RATE DIFFERENTIAL AND FORWARD DEUTSCHE MARK DISCOUNT ( — } 1 . U J..I. RATE DIFFERENTIAL WITH FORWARD EXCHANGE IN F A V O R OF F R A N K F U R T ( + ) l \ I N T E R B A N K L O A N RATE COVER AND INTEREST ARBITRAGE, FRANKFURT / L O N D O N 3 —MONTH TREASURY BILLS AND INTERBANK LENDING RATES GERMAN INTERBANK 10AH RATI 6 u: M A N TREASURY BlttS RATE DIFFERENTIAL AND 3- MONTH FORWARD STERLING : SPREAD IN FAVOR OF UNHID KINGDOMfellIS OVER: ;\ TREASURY B l t t S \ x . M i l RATE DIFFERENTIAL NIT INCENTIVE Of lit V/iTH FORWARD EXCHANGE COVER ! H G D 0 M C P.: Mi TREASURY ElU zv 7.1 "\/ W< V J '• ' / I K it. A N INIEK8AHK : • 10AN A I E V | v V'N : . I i SHORT-TERM INTEREST RATES * A- I I I I I I M 1 I I I I I I I I I I I I I I II I I l I l l I l I l I I l l I I l I I l 1 I I I I I l I I i i i I I i I o ft J'Av /7-v / r *1 J \ / it 1 j y f ' " 1 1 1 1 1 1 1 1 1 1 1 Sv•'V X I A L\ A w- 1 M 1959 1 1 1 1 1 1 1 1 1960 V ANADA v A ! u 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1961 1962 1 1 11 1 1 1I I II 1 1963 "X" 3 month Ireotury bill m m I or oil countries n l t p l Jopon ( ] month interbank deposit rate) ond Switzerland (3 month deposit role) LONG-TERM BOND YIELDS \-/ — > INDUSTRIAL STOCK INDICES 1958 = 100 H T M i - > SPOT EXCHANGE RATES - MAJOR JAPANESE YEN j r m a m j j a s o n d j CURRENCIES AGAINST U.S. DOLLAR 1 F M A M J J A S O N D J f M A M J j a Per c e n Above par , Above par s o n o I) 3 - M O N T H Fridoy F O R W A R D E X C H A N G E RATE figur*: A G A I N S T U . S. DOLLARS Per 1 PtEMIUM can! per a m 4- GERMAN MARK •-•J?-** - - r P O U N D STE R U N G - ^ - DISCOUNT 1 1 A G A I N S T 1 1 1 P O U N D 1 1 1 1 1 STERLING - 1 1 1 l 1 L O N D O N PREMIUM + AGAINST P O U N D STERLING 1961 - L O N D O N — 1 1 1 1 1 1 1 I I 1 1
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