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D I V I S I O N OF I N T E R N A T I O N A L F I N A N C E V BOARD OF GOVERNORS F E D E R A L RESERVE SYSTEM No13106 May 15$ 1963, CAPITAL MARKET DEVELOPMENTS ABROAD ri \\ Canada v? \ Nine Charts on Financial Markets Abroad 'I»--Canadag \ ' " ' Honey and Capital Markets During April ' / ^' v Following the April 8 eledtion5 the Canadian dollar:::cd. substantial strength throughout the monthc The Bank of Canada tooic in dollars . in increasing quantities during the latter part of April while holding the market rate on the Canadian dollar at about 92,9 U=S0 centsc In spite of some reported spot sales against forward purchases of U»S0 dollarss official holdings of gold and U,?, dollars increased by $71 million during April3 bringing the total to a record $2,671 million. In May, reserve gains are thought to have continued, The large April reserve gains and the largest first-quarter merchandise trade surplus in a decade helped to induce the Bank of Canada to announce a cut in the Canadian Bank rate from U to 3-1/2 per cent on May 6. This action reduced the Bank rate below the auction rate on Canadian Treasury bills$ as was the case with the reduction last November* Combined with Governor Rasminsky's statement that the reduction was a step toward encouraging "o o «credit conditions that facilitate sound domestic economic expansions" the Bank rate action was interpreted by financial markets to imply a further easing of Canadian short-term money market rates, T Short-term money rates, which had been relatively stable for some times dropped abruptly by about 1/5 of 1 per cent following the Bank rate announcement on May 6. On May 9 } the weekly tender rate on 3-month Canadian Treasury bills was down to 3 =>33 per cent from 3„60 per cent the week before <> While the uncovered spread favoring Canadian over U0S0 Treasury bills was thus reduced in early May, the "reduction was accompanied by a narrowing of the forward discount on the Canadian dollar, With the cost of forward cover decreasing at about the same rate as the decline in yield spreadss the fully-hedged incentive favoring the Canadian Treasury bill remained about stationary at about l/k per cent. Reduction in Bank rate, On May 6^ uovernor Rasminsky of the Bank of Canada announced a reduction in Bank rate from U to 3-1/2 per cent This was the fourth reduction in the Bank rate since it was pegged at 6 per cent as a part of the emergency program of June, 1962. Since the last reduction from £ to k per cent on November 13, short-term Canadian money rates have declined by about 1/2 per cent. The average .- :er on Canadian 3-month Treasury bills had declined from k<09 per cent just preceeding the November cut to 3»60 per cent on May 2, DECONTROLLED AFTER SIX MONTHS OFFICIAL USE ONLY 2 - The rate adjustment appears to be more than a technical readjustment. As was the case with the November cut, the rate was brought to a level fractionally below the preceeding week's Treasury bill tender rate, rather than above it. The cut, together with Governor Rasminsky's statement that ". . .it is appropriate in present circumstances for the central bank to continue to encourage credit conditions that facilitate sound domestic expansion," implied a further easing of Canadian money-market rates. Initial market reaction to the bank rate reduction seemed to support this prognosis. On the day following the announcement, the 3-month Canadian ^^Treasury bill rate dropped by about 1/5 per cent. The May 9 average tender on 3-month Treasury bills was 3.33 per cent, down from 3»60 per cent a week earlier« (See Table 10«) The Bank rate announcement and the decrease in short-term yields were accompanied by a slight and apparently temporary easing, from about 92.9k to about 92,81 U.S. cents in the spot rate on the Canada dollar. (See Table 10.) Money market <> Short-term money rates dipped slightly after the election in early April; but, by the end of the month, they had returned to end-of-January levels. On May 2, the auction yield on the 3-month Treasury bill was 3*60 per cent, the same level as on April h (see Table 10 and Chart 1). Following the Bank rate cut from U to 3-1/2 per cent, however, the 3-month Treasury bill rate dropped by about 1/5 of 1 per event, and on May 9, the average tender rate on the 91-day Treasury bill was dow^ to J.33 per cent from 3«60 per . cent the previous week. During most of February, March, and the first half of April, the discount on the forward Canadian dollar was sufficient to offset the yield spread between Canadian and U.S. Treasury bills. During the latter half of April, however, a net fully-covered incentive of about 1/2 per cent appeared in favor of the Canadian bill but it narrowed in early Mav to about l/k of 1 per cent. (See Table 10 and Chart 1.) Canadian Finance paper rates declined by about l/2 per cent from mid-March to mid-April, As the spread between U.S. and Canadian rates diminished, the narrowed forward Canadian dollar discount remained sufficient to largely eliminate any net incentive on a fully-covered basis (see Table l). Table 1. U.S. and Canadian Finance Paper Rates and Arbitrage Calculation (in per cent per annum) " Canada United States Spread 90-day forward exchange Net incentive Feb.- 20 ilar,' 15 Mar. 29 Apr . 5 k.00 3.00-3.13 0.9b U.oo 3.00-3.13 0.9U U.OO 3.13 0.87 3.75 3.13 0.62 -0.67 +0.20 -o.5U +0.08 -0.7U +0.20 —0o8l +0.13 OFFICIAL USE ONLY Apr. 12 3.SO 3.00-3.13 O.Wi -0.L7 -0.03 May 3 3.50 3.00-3.13 o.UU -o.UU —= = 3 - OFFICIAL USE ONLY Debt management operations0 The Government of Canada sold a new issue of $100 million in 365-day Treasury bills dated April 25=> .1963 at an average yield of 3,91 per cent, The official announcement stated that the proceeds of the new offerir" would "be used for general purposes of the Government of Canada0" While the new bill issue was being brought, onto the market,, howevers the Government reduced the amount of longer-dated securities0 Between March 27 and May 1 9 the total amount of Treasury bills outstanding (par value) increased $120 million5 during this same periods the amount of Canada Savings Bonds declined by $87 million<, and other Government of Canada securities outstanding declined by $llj.2 million (see Table 3)0 Bond marketo In generals the bond market has not shared in the easing of Canadian interest rates during the fall and winter months 0 Last summer3 Canadian actions were directed toward raising the yield curve of securities generally and in particular to raise short-term rates in order to stem the shrvntter-m capi+%1 outflows which contributed to the foreign-exchange crisis, During . Aprils Canadian•bond yields slipped perceptibly downward for the first time since Tate fallc, and after the May 6 bank rate reduction were at levels not recorded since about a year ago» (See Table 1L) Moreovers yields spreads over comparable long-term U o S 0 Government bonds also declined to levels prior to the mid-1962 emergency program0 Corporate and local-government securities shared in the modest yield decline experienced by government securities during the. month of April» The Mcleod r YoungsWeir & Company bond yield averages for these seoiors stood at levels generally about 1/10 per cent lower (excepts notably^rira&$ipalsswhich declined less) at the end.of April than they had been one mon%h earlier (see Table 2 0 Average Bond Yields as Reported .by McLerd YoungQ Weir & Company Apr 0 30 1962 10 Provincials 10 Municipals 10 Public Utilities 10 Industrials iiO Bond Yield Average 5.19* 5,38 5.17 5.15 5.22 Octo 31 1962 5.W 5.63 5.L6 5»U5 5=50 Mar. 29 1963 Apr. 30 1963 " 5.39% 5.51 5.1t9 5A2 5.1<5 5-32? 5.17 5.39 5.33 5.38 Source' Press Release by McLeodc, Young5 Weir & Company (Toronto)5 May OFFICIAL USE ONLY 1963, OFFICIAL USE ONLY Bank 1cans and bank liquidity. The advance in seasonally-adjusted general loans by Canadian chartered bankss which resumed during February- continued in Marcho Unadjusted figures show some decline in general loans in the first half of April and a further expansion later in the month0 The chartered banks sold Treasury bills more or less steadily during April; the same time during which the Government was increasing the total of bills outstanding by $120 million, A large portion—almost $100 million—of this supply of bills was absorbed by the general public 5 the rather sizeable remainder-$1U0 million—was taken by the Bank of Canada (see Table 3)„ Table Canada: - ^ t Purchases (+) or Sales (=) of Government Securities ~T?> millioris7~par value) JanT3l^eET?r^" Wb7~27^Mar0 27 . Mar o 2 7-May 1 Treasury Bills Other TreasI5y~'SiIlF" Other Treasury Bills Other Bank ci <-.-1.1 ? -x Chartered BanksGovernment Accounts General Public Change in Total Outstanding e/ s,/ b/ £' d/ ej Includes a Includes a Includes a Includes a Components decrease of decrease of decrease of decrease of may not add -Ui -12 +66 -13 - 3U +119 - 27 a/ - 11 h h -62 +70 « ~ +66 +63 -11 -30 b/ =75 -53 +1L0 - 90 .26 + 96 " 5 + 21 -132 0/ <=iili +120 d/ -229 $1 million in holdings of Canada Savings Bonds0 $21 million in holdings of Canada Savings Bonds0 $87 million in holdings of Canada Savings Bonds 0 $87 million in Canada Savings bonds Outstandingo to to; . due to rounding0 As the chartered banks sold Treasury bills during t>e months liquidasset ratlc-s were reduced somewhat from March levels„ On May 1 5 however5 they retained liquid-asset ratios> at 17 06 per cents were well above the 15 per cent agreed minimum (see Table U)o Favorable trade accounts continue0 Tradetiai9' continue to reflect 5 l'zeab'ie and avoraDli ~ readjustments to the Canadian devaluation. Following : a -sry ' r. arable fourth quarter} a $70 million surplus cn merchandise trade during the first quarter of 1963 was the most favorable first=quarter balance r ec ordea in a decai.e _? and compares with a deficit of $75 million recorded during the same period last year0 OFFICIAL USE ONLY OFFICIAL USE ONLY - 5 - Table U. Canadian Chartered Banks: Changes in Cash Reserves and Other (6an. $ million or percent) Level on Change durChange during Quarter May 1 ing month "1952 1963 1963 III IV I* Feb. Mar. Apr.-* Reserves Cash Reserves Liquid Assets - 53 - 81 + 17 +298 + 51 + 2 - 12 - 36 + 11 -53 1,150 2,183 8.16 8.11 8.C9 8.10 8.06 8.16 15.87 17.96 18.32 18.15 18.32 17.59 17.61 General Loans +198 -299 + + 23 +115 + 2k 6,53k Other Assets b/ Treas. Bills"" Govt. Bonds Total, Govt. Securities - 71 -560 +196 +337 +1U1 + 96 c/ - 12 c/ - ,U c/ +129 c/ - 11 -631 +533 +237 c/ +117 c/ - 15 Total Canadian dollar deposits -6U2 +1016 -7U5 +251 + 99 3,52k +266 1U,1|16 +i 1,178 2,3k6 i 1 23 8.16 & Ratios a/ Cash Ratio Liquid Asset Ratio a/Ratios given are averages for the periods shown. b/ Amortized value, ~cj Par value • * PreliminaryForeign exchange. During April the Canadian dollar gained substantial strength and remained in considerable demand throughout the month. After the election, the market rate on the dollar rose from a level of 92,7 - 92.8 U.S. cents and remained above 92.9 U.S. cents during the rest of April. After losing very modest amounts of reserves prior to the election, the Bank of Canada took in U.S. dollars almost steadily during the remainder of the month while holding the market price of the dollar at about 92.95 U.S. cents. As the rate of reserve accruals increased during the latter part of the month, press reports indicated that the Bank of Canada undertook forward transactions to move some of these gains into future months, Despite these spot sales against forward purchases of U.S. dollars, official Canadian reserve gains amounted to U,S<r $71.3 million. At the end of April, official Canadian holdings of gold and U.S. dollars stood at a record high of U.S. $2,671.1; million (see Table 5). Of this total, the only obligation remaining from the emergency assistance received during the 1962 crisis is that arising from the $300 million I.M.F. drawing at that time. OFFICIAL USE*ONLY O OFFICIAL USE ONLY Table" 5. Canada: - 6 - Changes in Official Reserves March 1962-March 1963 Official Holdings of Gold & U.S. dollars (millions of $ U.S.) Unadjusted change during period March 1,709.U - 37.3 — - 37.3 April 1,591.8 —1114 *6 — -11U.6 May — -102.0 End of Period 1962: Special Non-Market Receipts (-) (net) Adjusted change ^ 1,192.8 -102.0 June 1-2U 1,100.0 -392.8 June 2U-30 1,808.7 +708.7 a/ -650.0 + 58.7 July 2,HUM +305.7 b/ - 61.0 +2UU.7 August 2,330.6 +216.2 September 2,144u6 +111.0 October 2,613.9 +169.3 November 2,607.5 — December 2,539.1 - — -392.8 — +216.2 — +11U.0 + 20.0 +189.3 6.U d/ + 75.0 + 68.6 68.1 e/ +100.0 + 31.9 f/ -125.0 - 1963: January 2,662.5 +123.1 February 2,593.9 - 68.6 — - 68.6 March 2,600,1 + — + April 2,671.1 + 71.3 6.2 1.9 6.2 + 71.3 a/ External assistance received, as follows: $300 million from I.M.F.; $250 million from Federal Reserve3 $100 million from Bank of England, b/ Advance debt repayment by France. 0/ Special receipts included a $30 million debt prepayment by the Netherlands and receipt of $125 million proceeds of Government of Canada loan in the U.S.; payments included termination on October 31 of half the Swaps with the Federal Reserve Bank of New York and the Bank of England ($175 million). d/ On November 30, Canada terminated an additional $75 million of the Swaps with the Federal.Reserve Bank of New York and the Bank of England, e/ On December 26, Canada reversed the remainder of the swaps with the Federal Reserve System and the Bank of England in the amounts of $75 million and $25 million. The reciprocal currency swap in the amount of $250 million with the Federal Reserve Bank of New York was placed on a standby basis, f/ Receipt of the remaining $125 in proceeds of the Government of Canada loan in the U.S, OFFICIAL USE ONLY Stock market. The Canadian DBS Industrials Index rose sharply during the two weeks following the Canadian election, and then levelled out late in the month o The U.S. Standard and Poor Industrials Index advanced steadily throughout this same period (see Table 6)e Table 60 Canadian and U0S0 Stock Prices March 1963 DBS Industrials a/ 128^ N0Y0 Standard arid Poor Industrials b/ 68.77 April 1963 May 1963 129-0 130.U 130.9 133.& 137,U 137ol n.a. 68.87 69.63 73.U2 70.70 71.91 72.51 73.09 a? T^his"series is theRecently^published DBS index of 76 industrials (1956 » 100)s and replaces the older DBS index of 66 industrials (1935-1939 * 100) previously reported in Capital Markets Developments Abroad series for Canada. b/ Average for the week ended on Friday. Canadian banks" operations in U0S0 dollars. Total non-Canadian dollar deposits in chartered Banks fell by~"f7B million during March. During the same period^chartered banks" non-Canadian dollar assets declined by about $92 million„ In addition to this net decline* Canadian chartered banks channelled another $50 million from foreign-currency security and loans into deposits with other banks (see Table 7). The drop in Canadian street loans in New York coincided with increases in street loans by other foreign agenciess during March to a level quite high by recent standards (see Table 8). In April* total foreign agency loans rose by $50 milliono OFFICIAL USE ONLY OFFICIAL USE ONLY - 8 - Table ?«, Canadian Chartered Banks? Non-Canadian-Currency Assets and Liabilities " ' (millions of Canadian dollars JT" Total. Out, standi Dec*" 1 9 5 6 " DeCo 1961 Dec 0 1962 Deposits ~ Call w/other Banks Loans -221.1 - 68.2 +ik9.5 -186.5 +21U.U +135.8 -166.5 -1^1.2 -250.2 +187.9 - 75.k ir Da:- 0 196; & Feb 0 Mar o Table 8* — Date 1960=December 1961-=Deoen ber 1962 s June July AugustSeptember October November De-ember 1963; January February Mar: A April 1"? ^ 8U06 + $0.2 2,007.k 2^785.9 :,26k.l 2,651.3 3,k88.k 3,957.9 +130.6 - 71.2 - 59.1 ' 88,6 +w71.3 + 32.5 "I38ok - 31.9 +193.0 + 1 3 5 . 7 +111.8 +162.6 * 78,6 + ik.5 + k5«5 ' +185.9 -129.1 +1L7.2 - k9.3 + 77.5 + 90,0 +127.1 - 35.7 v u6 6 6 - 2 2 5 . 7 - «= 6 2 0 3 + 3.2 + I 8 3 . 8 + 52.1 + 8.6 +111.6 + 17.5 - 91.8 + 3.6 - 21.3 +251.9 +526.2 +171.3 =170.9 +210.6 +327.2 - 78.7 + 19.1 -1^8oO +107.2 +115.6 = 81.3 +180.7 +509.3 +203.2 - 59.1 +289.2 +198.1 - 1.2 2,716.5 3,592.5 3*95808 -113.9 +261,7 -137,5 + 19.0 - 20.1 =231.6 +170.1 - 78,$ - 77.2 . 11,2 + 93.8 5k.7 H I IV k6.9 702.5 693.8 813.7 1,068.7 1,365.9 ^ 82.5 <L89,2 r 93.9 -110.2 -106.2 ^236*2 =?(X).l ^26608 - 55.1 ^ 3.9 = 66.0 LIABILITIES Total Total #6.8 672,7 705.2 Deposits by other Banks Other Deposits Other Loans 8lk,5 8k3.8 - 683.7 III IV . Securities 531.5 1,007.3 l=20ii„0 Changes During x 1961' 1962 ASSETS Call Loans in the New York Market9 end of Month (Wednesday Dates) — millions) — ~ u.s.^ Foreign Agencies Canadian b/~~ Other Banks Total a r 20 1^96 829 819 809 50 1,963 859 610 1,361 69 ' 5L1 !,0L2 187 173 i,iki uu 778 73k 708 r/ 2,020 r / k2 r / 750 - 2:086 - 8k6 76k ^ 6k 706 69 l,kl7 775 2,618 709 63k 88 1,692 625 713 2,157 788 712 76 660 111 1,725 . 771 n.a„ n0a0 829 1/733 a/ Estimates by New York State Banking Department. b/ C-all Leans c, as reported by Canadian banks^ converted into U 0 S 0 dollars at end-cf-month exchange rates. e/ Residual. r/ Revisedo OFFICIAL USE ONLY «= 1 6 0 6 -2L0.3 +159.3 +133=1 - 77.7 - 9 *° OFFICIAL USE ONLY Borrowing in the U.S. Between March 18 and May 6, A» E„ Ames & Company reported five Canadian bond issues sold in the U0S0 market, totalling $75*5 million. Of this total, $50 million was accounted for by the single issue priyately placed by Bell Telephone Company of Canada0 The Canadian issues reported sold in the U.S. during this period were: In March: Pacific Great Eastern Railway Company, $3 million sinking fund debentures due 1988, placed privately« Industrial Acceptance Corporation, Ltd0, $10 million secured notes due U/l/88, placed privatelyo In April: Union Acceptance- Corp. Ltd. $7.5 million secured notes due U/I/7U-78, placed-privately„ In May: British Columbia School Districts Capital Financing Authority, $£•0 million Guaranteed by the Province of British Columbia, 5 per cent securities due 5/15/6U-83 reportedly sold at a price of 100.#. Bell Telephone Company of Canada, $50 million first mortgage bonds due 5/1/88, placed privately„ As reported by A. E. Ames and Company, these securities placements brought the total of Canadian securities sold in the United States to $572 million through May 6. This compares with a total of only $105 million and $11 million during comparable periods of 1962 and 196l, respectively (see Table 9). Table 9. Sales of New Canadian Securities Payable in UoS0 Funds " (Can. $ millions) """ 1963 to May 6 1962 to May 7 1961 to May 8 Total Provincial Provincial Guaranteed 572.1 10U.5 11.0 25.0 353oO — , Source: A. E. Ames & Co., "Weekly Bond Sales Summary »u Europe and British Commonwealth Section. OFFICIAL USE ONLY Municipal Corporation 2906 lo5 -°*= 16U»5 103.0 11*0 \* Table 10. Canada: Treasury Bill Yields and Exchange Rates 3-mo» Treas» bill arbitrage calculation Spot In Can.# 3-mo. favor (U.S. Canada U.S. DifferCan,# Can. ence b/ bill c/ cents) 5/ jL 5.51 3.01 2.98 2.64 19 5. 51 2.93 31 14 21 April 4 10 18 25 2 May 9 3.65 3. 66 3. 65 3.60 3.48 3.57 3.66 3.60 3.33 2.93 2.92 2.87 2.91 2. 90 2.89 2.89 2.90 2.91 1962-High Low 1962-July 1963-Jan. Feb. 0.13 -2.13 0.84 -0. 11 95. 75 91. 73 2.58 -2.02 +0.. 56 92. 72 0. 72 -0.94 -0. 74 -0. 74 -0,54 -0.54 -0, 27 -0. 20 -0.44 -0. 20 -0 22 92.80 92.75 92.80 92. 75 92.92 92,9192. 94 92, 94 92.81 2.59 0.22 0. 74 0. 78 0,69 0.58 0.68 0. 77 0.70 0.42 0.00 +0.04 -0, 15 +0.04 +0,41 +0.57 40.26 40.22 finance paper 90-179 3.0-89 days days 3-3/4 3-3/4 4 3-3/4 3-1/2 3-1/2 - 4 4 4-1/4 - 4 4 4-1/4 4-1/8 - 1/4 - 4 3-7/8 - 4-1/8 - 3/4 3-3/4 - 7/8 - 3/4 3-3/4 - 7/8 3-3/4 3-1/2 , ; a/ Thursday q u o t a t i o n s . b / Spread between spot and 3-mon#L^S%gard rate in per cent., per annum. Discount equals (-7» c/' Net of difference^in bill yd^dF^Less discount on 3-month Canadian dollar. ' ^ Table 11. Selected Government of Canada Se^g^jLtyL Yields Intermediate E6ng~term bonds 6-mo. Treas. bills bonds (8 yr.) C20 year) (35 year) Spread Spread Spread over Canada over Canada over Canada over Canada y U.S. b/ c/ U.S. d/ U.S. f/ U.S. h/ s/ sJ 5, 74 3. 18 1962-High Low 1962-July 1963-Jan. Feb. March April May 19 2.84 0, 19 5c 20 4,04 .L 33 0,00 5.48 4.73 1.47 0. 73 5.20 4,81 1.29 0.86 5.74 2.59 5, 11 L 16 5,48 1,44 5.15 1,03 4.06 3.85 3.73 3. 75 3.73 3. 75 3. 67 3.80 3. 74 3.40 1. 12 0.85 0. 79 4,48 4.35 4.36 4.41 4,45 4.39 4. 37 4.41 4.32 4= 14 Ok 97 5.08 5,02 5.05 5,08 5.01 4.93 4.91 4.92 4. 91 4.86 1. 21 1.13 5o 10 5,01 5,04 5.04 5.01 4.99 4.97 4,97 4.97 4.94 1,17 1,02 1.14 0.82 0. 75 0. 60 0. 68 0.81 0, 75 0.41 0.82 0.85 0,88 0.88 0.76 0, 72 0, 80 0,75 0, 58 1.18 1. 20 1,13 1.02 0, 97 0.98 0,98 0. 94 a7 Average yield at weekly tender on Thursday. ' b/ Spread between Canadian auction rate and composite market yield of U.S. bill on close of business Thursday. c/ Government of Canada 2-3/U per cent of June 1967-68« d/ Spread over U.S. Government 2-1/2 per cent of 1963-68. e/ Government of Canada 3-l/U per cent of October 1979» f/ Spread over U.S. Government 3-l/U per cent of 1978-83• g/ Government of Canada 3-3/U per cent of September 1996 - March 1998* Digitizedh/for Spread FRASER over U.S. Government of 1995c 1.06 1.01 0.97 0.92 0. 93 0.94 0.93 u INTEREST ARBITRAGE/ UNITED S T A T E S / C A N A D A jThurtday tigur>» a I I I 13-MONTH TREASURY 1 r~ BILL RATES UNUNITED STATES I RATE D I F F E R E N T I A L A N D FORWARD CANADIAN DOLLAR SPREAD IN FAVOR OF CANADA * ! RATE D I F F E R E N T I A L W I T H FORWARD EXCHANGE COVER NET INCENTIVE IN FAVOR OF CANADA + nr IT is [mo" a YV INTEREST ARBITRAGE, N f W YORK/IOMDON 3 - M O N T H TREASURY BILL RATES J I J 1 1 1 1 1 1 \ 1 RA:FE DIFFERE N T I A L A N ID 3 - M O N T H FOFi W A R D STE RLI N<3 ». - 1 - -J z V--\ V' \ I < \ \/ I v - y 1 1 1 1 1 1 1 1 - 1 1 1 1 - DON r 1 \ 1 1 Y FAVOR - 11 X J1 /I ] r i L - v. ID RATE - 1 1 1 1 1 1 i i 1 I 1 1 1 1 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 IN FAVOR OF LONDON I960 1961 '1962 1963 1 1 INTEREST ARBITRAGE FOR G E R M A N COMMERCIAL BANKS Friday-figures 3-MONTH P e r cent p e r TREASURY EURO-DOLLAR BILLS, DEPOSIT INTERBANK LENDING RATE A N D RATES GERMAN INTERBANK RATE DIFFERENTIAL AND FORWARD DEUTSCHE MARK DISCOUNT ( — } I V- RATE D I F F E R E N T I A L W I T H — NET INCENTIVE: 1961 FORWARD EXCHANGE 1962 * Note: Special forward rale available lo German commercial bank; COVER fAVOR Of FRANKFURT ( + ) 1963 INTEREST A R B I T R A G E , FRANKFURT / Friday figures 3 — M O N T H TREASURY BILLS A N D RATE D I F F E R E N T I A L A N D 3—MONTH 3,—rc 1961 LENDING RATES FORWARD STERLING ^ / " X V G E R M A N TREASURY BILLS GERMAN INTERBANK LOAN RATE RATE D I F F E R E N T I A L W I T H LONDON INTERBANK FORWARD N, EXCHANGE 1962 COVER 1963 SHORT-TERM INTEREST RATES * (3 month interbank depon dollar depoiiis in London i7~ond Switzerland (3-monlk dcpoiil role} . | L O N G - T E R M B O N D YIELDS 7 w 1961 1963 . I N D U S T R I A L STOCK INDICES* 1958 = loo Ratio scale GERMANY \ 450 400 JAPAN 1962 ' • Not*: j Japan: index ol 22 5 induitnal and other ilocks traded on the Tokyo exchange. 1963 SPOT E X C H A N G E RATES - M A J O R CURRENCIES A G A I N S T U.S. DOLLAR Below par Above pa Below pa Above par C A N A D I A N DOLLAR X0, 3 - M O N T H F O R W A R D E X C H A N G E RATE Friday fig ores A G A I N S T U. S. D O L L A R S Per cent p e r annum A G A I N S T P O U N D STERLING - L O N D O N — V U. S. DOUAR \ X , . A G A I N S T P O U N D STERLING - L O N D O N — n 1962 1963
@FedFRASER