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B O A R D OF GOVERNORS
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
F E D E R A L RESERVE SYSTEM
H. 13
May 5, 1965.
No. 194
CAPITAL MARKET DEVELOPMENTS ABROAD
I.
II.
III.
Switzerland:
^
Switzerland
Nine Charts on Financial Markets Abroad
Latest Figures Plotted In H. 13 Chart Series, 1965
Capital Market Developments, December 1964 - April
1965
Significantly easier conditions developed in Swiss financial markets
during January-April largely because the large volume of funds repatriated
from abroad during November and December remained in Swiss markets.
By midApril, the Zurich three-month deposit rate was down to 3.25 per cent from
3.75 per cent in December, and the yield on long-term government bonds had
fallen to 3.88 per cent from 4.04 per cent in January.
(See Table 1.) In
the exchange market the Swiss franc dropped to a fifteen year low and the
Banque Nationale Suisse (BNS) used reserves to moderate the decline in the
exchange rate.
Table 1.
Switzerland;
Selected Financial Indicators
June
26
19 6 4
Oct.
30
Dec.
31
Jan.
29
1 9 6 5
Feb.
March
26
12
April
23
3.25
3.67
3.50
4.50
3.70
3. 91
3 .06
3 .28
3.00
3.41
3.06
3.62
J>/3.25
3.78
2.74
3.88
3.53
4.25
3.09
3.50
2 .61
3,. 12
2.82
3.25
2.53
3.75
2.93
3.88
Deposit certificates
(3 to 8 years):
12 cantonal banks
5 large banks
4. 11
4.14
4.18
4. 14
4. 34
4.29
4,,36
4,,29
4. 36
4.29
4.36
4.29
j>/4. 36
f/4,29
Long-term government
bonds
4.05
4.03
4.06
4. 05
3.96
n.a.
3.88
Interest rates
3-month yields:
Zurich banks a./
Euro-dollars b/
U.S. Treasury
bills
b/
Euro-Swiss francs
Stock prices
(1958=100)
Exchange rates
Spot francs (U.S.
cents)
Forward premium (+)
discount ( - ) on
franc
c/
a/
b/
c/
p/
228.5
23.175
+0.71
237.5
23.175
0,00
236.6
234. 3
241.5
237.2
23.178
23. 128
23.094
23.010
23.000
+0.71
+ 1 •22
+1.15
+1. 38
+0.97
Most frequently quoted rates of the five large Swiss banks in Zurich,
Return in Swiss francs after cost of exchange cover.
Per cent per annum.
Preliminary figures.
OFFICIAL USE ONLY
(Decontrolled after six months)
FRASER
Digitized for
225.4
\
OFFICIAL USE ONLY
-
2
-
Continued financial uncertainty, especially regarding sterling, and
the development of a high premium on the forward franc discouraged the return
flow of funds to money markets abroad after the first of the year. As a result,
excessive liquidity characterized the money market. The BNS mopped-up some
funds from the market in January but had little effect on general market tone.
The high degree of monetary liquidity and a large open position
against sterling hurt the Swiss franc exchange rate, driving it below 23 U.S.
cents at times in March and April.
(See Table 1.) The BNS lost reserves in
moderating the decline in the rate, but s.'.nce last Ncv•;•.•ber (::hs;; tha sterling crisis
set off the heavy volume of flight capital inflows), net reserves have risen
by more than $100 million.
Between December and March, yields eased on long-term bonds at a time
when new issue activity doubled in volume. However, the Swiss authorities have
continued their stringent limitation on foreign issues,and this policy has
stirred considerable criticism by the banking community because of concern for
Switzerland's international financial position. Some, although not much,
relaxation of the virtual embargo against foreign issues is expected in market
circles.
Excessive liquidity depresses short-term interest rates
Unusually liquid conditions persisted in the Swiss money market
throughout the January-April period in spite of tighter conditions in Eurocurrency markets and liquidity-absorbing operations undertaken by the BNS.
The rate large Zurich banks pay on three-month deposits dropped from December's
high of 3.75 per cent to 3.06 per cent in January--its lowest point in a year-and firmed only slightly to 3.25 per cent at the end of the first quarter.
(See Table 5 and Chart 5.)
Although rates continued high, the seasonal tightening in the money
market late in December was moderated by the heavy inflow of flight capital
which began in November with the sterling crisis and continued into 1965. The
increase in Swiss official reserves--$280 million during the last seven weeks
of 1964-- is indicative of the size of these inflows:
these funds are thought
to have come largely from the London Euro-dollar market.
Between September
and December, Swiss dollar balances in London were drawn down almost $250 million.
Several factors, however, worked to restrain the usual return flow
of funds abroad after the first of the year. The continued weakness of sterling
and the international monetary uncertainty it engendered contributed to this
result. During December the banks converted their foreign exchange holdings
into francs by direct spot dollar sales in the foreign exchange market rather
than through over-year-end swaps with the central bank, as they have tended to
do in recent years.
In addition, a relatively high premium developed on the
forward franc, increasing the cost of investment cover and discouraging placing
funds abroad. Funds were so plentiful at times that market observers expressed
surprise that rates did not ease further and attributed their level mainly to
the influence of higher rates in other financial centers.
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- 3 -
In an attempt to reduce excess liquidity, the BNS undertook a mopup operation in the third week of January that withdrew SF 473 million from
the money market.
(a) In the first of two transactions, it took in SF 202 million
from one of the large commercial banks in exchange for dollars.
The commercial bank then invested the dollars in U.S. money market
paper.
(b) In the second transaction, the BNS transferred to two other
large commercial banks SF 271 million equivalent in Bank of England
obligations acquired from participation m the operation to support
the p-iund sterling.
However, these operations had little effect on the market, and rates did not
begin to firm until mid-March when the sudden tightening in the Euro-currency
market attracted funds to foreign banks and Swiss banks built up their
liquidity for the first quarter's window-dressing,,
Some interest rates increased during the period, however.
The more
attractive rates paid on 3-8 year certificates of deposit (Kassenobligationen)
beginning in November (see Table 6) so effectively drew funds from savings
deposits that banks and savings institutions were forced to raise their savings
deposit rates in January from 2,98 per cent to 3.17 per cent to moderate the
flow. Also, in what was called a techincal adjustment to the generally higher
level of interest rates, the large banks increased their discount rate from
2-1/2 per cent to 3 per cent, putting it 1/2 per cent above the BNS official
discount rate. Unless monetary conditions tighten, however, it is unlikely
that the BNS will follow with an increase in the official discount rate as
it did in July 1964, two months after the last increase in the commercial
bank private discount rate.
Swiss franc drops to lowest level in fifteen years
In the foreign exchange market, highly liquid monetary conditions
weakened the Swiss franc substantially more than seasonally; from its ceiling
of 23.178 U.S. cents against the dollar at the end of 1964, the spot rate
dropped to 23.065 U.S. cents in early March.
(See Table 5 and Chart 8.)
During March, sharply increased demand for foreign currencies pushed the franc
rate below 23 U.S. cents,its lowest point since 1952.
Several factors combined to produce the increased demand for foreign ,
exchange and to depress the Swiss franc rate:
(a)
Commercial demand for foreign currencies strengthened;
(b) The lower cost of forward cover, higher Euro-currency rates,
and continuing easy money attracted funds abroad (see Table 5);
(c) The proceeds of a foreign issue sold in Switzerland were
converted;
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OFFICIAL USE ONLY
- 4 -
(d) Demand from American subsidiaries lining up European financing
in compliance with the U.S. voluntary credit restraint program increased;
and
(e) Speculators were reportedly seeking to cover open positions they
had taken against sterling during the November crisis.
All these factors helped to push down the franc rate.
In fact, ample
domestic liquidity made it unnecessary for commercial banks to repatriate
foreign holdings in late March through the exchange market for quarter-end
window-dressing; the franc rate actually weakened at that time.
The BNS sold francs in the foreign exchange market when they were in
demand during the sterling crisis, and then bought them to moderate weakness in the
rate in March.
In addition, during the sterling crisis, it made one-month swap
facilities available to the commercial banks. These facilities, which allow the
banks to receive Swiss francs against dollars for repayment one month later, are
usually made available only for quarter-end window-dressing purposes.
The generally increased speculative demand for gold pushed the price
of the 20-franc Vreneli from 39.50 francs in November to 42.00 francs currently.
(See Table 6.)
Most of the.buying has reportedly come from the Middle East.
Official reserves gain since November
BNS official reserves of gold and foreign exchange gained $110 million
during the November 1964-April 1965 period.
(See Table 2.) They increased
$280 million in November-December during the heavy inflows and afterwards
dropped only $170 million. On April 23, BNS gold and foreign exchange were
$2,944 million, up from $2,739 million ? year earlier.
In order to improve its gold ratio, the BNS acquired $194 million
equivalent of gold during December, both through direct purchases and through
a series of swap transactions with the Bank for International Settlements (BIS)
that concurrently reduced BNS dollar holdings.
(See Table 2.) Some of these
swaps were unilateral and involved a direct exchange with the BIS of dollars for
gold. However, $ 100 million equivalent of gold was obtained through a Swiss
franc/gold swap with the BIS. The BIS then transferred the Swiss franc proceeds
to the'Federal Reserve under its currency swap arrangements, and the Federal
Reserve in turn used them to reduce BNS dollar holdings by an equivalent amount.
The reductions in gold holdings in January resulted from reversing one of these
swaps.
Official foreign exchange holdings decreased in January because the
Swiss franc/dollar swaps-made with the commercial banks over the year-end were
reversed.
(See Table 2.) Losses in March were due primarily to direct central
bank sales to the exchange market and to Confederation payments abroad under
reciprocal tax agreements.
However, approximately $16 million resulted from further
Bank of England drawings on the "support package" which the BNS participated
in last November. JV
These BNS assets with the Bank of England, (called
_1/ As of April 23, Bank of England drawings of Swiss francs from the BNS under
this borrowing arrangement were $40 million.
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- 5
OFFICIAL USE ONLY
Table 2.
1962
Switzerland:
(end-•of-period figures, in millions of U.S. dollars)
Total
Foreign exchange
Gold
204
2,872
2,668
2,820
254
3,074
+202
I
II
III
IV
October
November
December
2,726
2,543
2,599
2,532
2,726
2,532
2,532
2,726
394
201
352
318
394
308
445
394
3,120
2,744
2,951
2,850
3,120
2,840
2,977
3,120
+ 46
-330
+207
-101
+270
- 10
+137
+143
I
January
February
March
April 23
2,703
2,703
2,703
2,703
2,714
247
312
300
247
230
2,950
3,014
3,003
2,950
2,944
-170
-106
- 11
- 53
6
1963
1964
Qtr.
1965
Qtr.
Source:
Change
+114
Banque Nationale Suisse.
"rate-secured balances with foreign central banks" on its statement) are not
included in the calculation of foreign exchange reserves; the Swiss francs drawn
by the Bank of England in this case were sold to the Federal Reserve which used
them in turn to reduce BNS dollar holdings.
Long-term yields ease; new issues increase
Easier conditions in the long-term capital m a r k e t — g e n e r a l l y attributable
to the large volume of repatriated funds--was reflected in lower yields on outstanding bonds and a more receptive climate for new issues during the period
under review.
Yields, however, maintained their high level from November to
early February, when higher prices caused returns on outstanding government bonds
to decline:
from 4.04 per cent (per annum) in February yields fell to 3.88 per
cent on April 9, the first time they had fallen below 4 per cent in almost a
year.
(See Table 7 and Chart 6.)
New issue
activity pushed up steadily from December; gross new issue
volume in March more than doubled December's $29 million.
(See Table 7.)
Almost all new issues were over-subscribed in spite of a slight movement of terms
in favor of the borrower.
Coupon rates went from 4 - 3 / 4 per cent to 4 - 1 / 2 per
cent for the most reputable borrowers, and power companies now borrow funds at
a 4 - 3 / 4 per cent coupon instead of 5 per cent.
OFFICIAL USE ONLY
OFFICIAL USE ONLY
Signaling still greater activity for the near future, the second
quarter quota 1./ for domestic public bond issueb (larger than SF 5 million)
has been set at $181 million, approximately $15 million above the first quarter.
This allows for $346 million in new bonds in the first half of the year, or
about $33 million more than during the comparable period of 1964.
The authorities continue to block foreign borrowing although a small
semi-foreign issue (Rheinkraftwerk Sackingen, a jointly owned Swiss-German
power company) was floated in March, the first since October 1964.
(See Table 3.)
However, on April 21 a syndicate of leading banks offered approximately $14 million
in 4-3/4 per cent, ISryear bonds for the International Banjt for Reconstruction
and Development (World Bank). This is the twelfth public World Bank issue in
Swiss francs but ttie first since January 1962. Reportedly, other foreign bonds
will be approved by the BNS soon.
The drastic reduction in the foreign business of Swiss underwriters — ^
at the same time European international lending is growing has recently stirred
considerable concern for Switzerland's place as an international financial
center and increased opposition to the government's capital controls.^/ The
Swiss share of total foreign issues placed by European banks was as high*as 90 per
cent in 1960; in 1962 (the last full year before the U.S. interest equalization
tax) it was still 52 per cent. 4/
However, in 1964, it fell to 11 per cent.
Table 3.
Switzerland: Foreign Bonds Issued, 1965
(million Swiss francs)
Coupon (%)
January
None
February
None
Earch
.„
Rheinkraftwerk Sackingen
(German power company)
A.S. Vaksdal M i l e
Bergen, Norway
April
International Bank for
Reconstruction and
Development
Issue
price (%)
Yield to
maturity(%)
4.75
4.63
5.00
5.00
Amount
4.5
4 . 75
Not only are Swiss financiers upset by the scarcity of foreign issues
in the Swiss market, but they feel they are unfairly hindered in launching or
participating in international dollar issues, especially since (they maintain)
JL/ This quota is set by a special commission and approved by the BNS under
the procedure established by the Swiss Federal Council in its decree of April 24,
1964. It applies to the net value of money raised on the m a r k e t — t o t a l market
value of issues minus conversions.2/ As on most of the Continent, in Switzerland the large commercial banks do
the underwriting.
3/ The Neue Zurcher Zeitunq ("Handelsteil" April 11, 1965, Blatt 10) in a recent
editorial surprisingly reversed its support of the Federal authorities and attacked
the government's capital control program.
4/ The Economist, April' 10-16, 1965, jpk 219.
OFFICIAL USE ONLY
- 7 -
OFFICIAL USE ONLY
80 per cent of the funds going into dollar bonds comes from Switzerland.
In
addition to government controls, Swiss banks are effectively prevented from
seriously competing with London underwriters for heading foreign currency
placings by the 1.2 per cent tax on the value of loans which have their names
on the placing list.
They may take part anonymously in selling groups, but
their commission is only half what they could get by taking the entire placing.
Swiss stock prices rallied briefly in February-- the increased interest
coming from buyers betting on defeat of the government's anti-inflationary program in the referendum on February 28--but have since fallen off sharply.
The
endorsement of the government's program at the polls and imposition of measures
to reduce the number of foreign workers in the country produced continual selling
pressure over the entire list.
Between the first of March and mid-April, the
Swiss Bank Corporation's industrial share index dropped nearly 7 per cent to a
level just above its 1964-65 low of last June 3.
(See Table 4
and Chart 7.)
Table 4.
Switzerland:
Industrial Share Index
(1958 = 100)
1964-65
1964-65
1964
January
June
September
October
November
December
1965
January
Source:
31
26
25
30
27
31
249.5
228.5
238.9
237.5
238.5
236.6
8
15
22
29
235.2
234.0
234.4
234.3
High:
Low:
258.1
218.6
Jan. 6 , 1964
June 3, 1964
February
March
April
5
12
19
26
5
12
19
26
2
9
15
23
30
239.2
237.4
237.1
241.5
242.6
237.2
229.0
226.5
220.3
219.5
226.2
225.4
224.6
Swiss Bank Corporation.
Foreign trade deficit down sharply
An unexpected increase in exports in January and February (seasonallyadjusted) sharply decreased Switzerland's large foreign trade deficit. (See
Table 5.) Compared with year earlier figures, the January-February deficit was
down 33 per cent.
Total exports were up 7.2 per cent during the period from
November-December levels (less than 1 per cent in the comparable periods in
1963-64); the increase came in spite of decreased exports to the United Kingdom
as a result of the special import surcharge.
Strongest foreign demand was for
textiles, clothing, and pharmaceuticals.
OFFICIAL USE ONLY
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-
8
-
During 1964, sharply increased imports pushed Switzerland's foreign
trade deficit up 15 per cent above the previous year's level to a record $948
million.
Imports grew by 11.1 per cent (7.7 per cent in 1963) while exports
rose only 9.8 per cent (8.8 per cent in 1963).
Imports of manufactured goods,
especially machine tools and consumer items, made particularly high gains,
reflecting the high level of expenditure during the year for investment and
consumption.
Table 5.
Switzerland: Foreign Trade
(Seasonally-adjusted monthly average or month, millions US dollars)
1963
Ill
IV
Imports, c., i.f.
Exports, f. o. b.
Deficit
Source:
I
II
III
1964
IV
Oct. Nov. Dec.
1965
Feb.
Jan.
278
200
280
210
296
212
296
219
302
225
306
227
305
235
307
223
307
223
289
238
303
240
-78
-70
-83
-77
-77
-79
-70
-84
-84
-51
-63
OECD, Main Economic Indicators;
II.
Neue Zurcher Zeitung.
Nine Charts on Financial Markets Abroad
Chart 1 - International Money Market Yields for
U.S. Dollar Investors
Chart 2 - Interest Arbitrage, United States/Canada
Chart 3 - Interest Arbitrage, New York/London
Chart 4 - Interest Arbitrage for German Commercial
Banks
Chart 5 - Short-term Interest Rates
Chart 6 - Long-term Bond Yields
Chart 7 - Industrial Stock Indices
Chart 8 - Spot Exchange Rates - Major Currencies
Against U.S. Dollar
Chart 9 - 3-month Forward Exchange Rates
Europe and British Commonwealth Section
OFFICIAL USE ONLY
Table 6„
F orward
Swiss
franc
(3-moo)
1964
1965
Oct.
Nov.
Dec.
Jan.
Feb.
2
13
4
31
29
11
19
26
March 5
12
19
26
April
2
9
16
.?3,
- 9 -
Switzerlands Money Ratess Exchange Ratess and Gold Prices
+0.30
+0.02
+0.28
+0.71
+1.22
+1.34
+1.38
+1.15
+1.13
+1. 38
+1.31
+1.33
+1.20
+1.11
+0. 99
+0.97
US Tr . bill
Net
Bill return
yield in SF
3.53
3.23
3.56
3.76
3,80
3,83
3.89
3,94
Euro-dollar
deposit
Net
London return
rate in SF
4.44
4.14
3.54
4.50
3.48
3.09
4.75
4.48
4.47
3,91
3.28
2.61
2.55
2.56
4.62
4.50
4,50
4.56
4.56
4.75
5.00
4.88
4.88
Swiss
bank
deposit
(3-aio.)
3.38
3.68
3.75
3,70
3,06
3.06
3.06
3.00
3.06
3.06
3.06
3.18
3.25
3.25
3.25
Spot
SF in
$ *
23.148
23.176
23.178
23.178
23.128
23.105
23.083
23.094
23.065
Spot
£ in
ST
Gold
coin 5/
in SF
12.022
12.007
39.75
12.044
39.50
39.50
12.038
39.25
12.070
40.00
40.50
40.50
. 40.40
41.60
42.25
42.00
12.099
3.16
12.100
3.18
12.098
3.4L
3.97
2.82
12.106
3,62
3,93 2.80
12.132
23.010
3.62
3.91
2.53
12.105
23.011
3,90 2.59
3,57
12.125
23.003
3,86 2.53
3.55
12.110
23.026
4.75
3.91
2.71
3.55
12.110
23.035
4. 75
3.64
3,90 2.79
12.125
3,83
23.028
3.91
4.82
2.92
23.000
3.90 2.93
4.75
3,78
a/ "Vreneli" 20~franc piece (0.1867 troy ounces| $6»5>3 at $35> per ounce)»
42.00
42.00
42.00
42.00
*
Recent upper limit of 23.178 imposed by BNS in the Swiss market; however, the Swiss
authorities are not committed to hold the rate below 23.283.
Table 7„
Long-term
govt.
bonds
High
Low
Jan.
July
Oct.
Dec.
4.05
3,83
3.43
4.07
4.10
4.04
4.06
4.04
4.05
4.04
3.96
3.96
3.94
Switzerland s Selected Capital Market Statistics
New issues
month)
($ millions| monthly ave. or :
(New money raised)
Total
Pgn.
Swiss Swiss
a/
bonds stocks
bonds Gross Net 1
Deposit cert11 s
12 can5
tonal
large
banks
banks
4,36
4.34
3,88
4.13.
4.18
4.33
4,34
4.34
4.36
4,36
.4,36
4.36
4.36
4.36
4.36
4.36
4.36
4.36
4.36
4.29
4.29
3,85
4,14
4.14
4,29
4.29
4.29
4.29
4,29
4.29
4.29
4.29
4,29
4.29
4,29
4.29
4,29
4.29
19,,8
21,,8
40.5
48.4
66.,9
37., 1
II
37.,3
III
52,,2
IV
July
19.4
Aug.
23.9
Sept. 68. 6
Oct.
46. 2
85. 2
Nov.
Dec.
25. 3
1965 I
45, 7
36. 5
Jan.
Feb.
48. 7
March 52. 0
1961
1962
1963
1964
1964 I
3
3
9
4
31
8
1965 - Jan.
29
Feb.
12
19
26
March
5
n. a.
12
n. a.
19
n
• a.
26
3.91
April
2
9
3,88
3.88
16
23
3.88
a/ Net of reimbursements. Amounts by type are gross"!
7.2
12.8
10. 2
10.9
11..9
24.3
5.0
2.5
8.0
.9
6.2
2. 7
2.2
2.7
7.8
1.9
12.9
8.7
18.,6
12., 7
11.,4
7.4
7,6
10. 1
10. 0
1. 9
16. 0
14. 0
0. 0
4. 8
0.0
1. 0
3. 1
0.0
0. 0
9. 3
45,.7
47,. 3
62 .0
66,.7
86..4
71.,5
52,.3
56..7
43.,5
38..7
74.,8
53.,7
87.4
29..0
56.,7
38.,4
61.6
70.,0
42.6
38.3
54.2
58.4
85.8
65.8
50.7
31.4
39.9
38.3
74.0
52.8
27.6
13.9
49.8
20.0
60.3
69.0
Chart \
I N T E R N A T I O N A L M O N E Y M A R K E T Y I E L D S FOR U.S. D O L L A R I N V E S T O R S
3 - M O N T H EURO D O L L A R D E P O S I T V S . C E R T I F I C A T E O F D E P O S I T
Wedne»doy
(igure.
.
&
Per t e n t
U . S . CERTIFICATE O r DEPOSIT
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
1
1
I I I I I M I I
I I I 1 1 I I I I I I1 lI II II I 1 I I
SELECTED I N T E R N A T I O N A L M O N E Y RATES
f/iddy"?
EURO D O L L A R
COMMERCIAL
DEPOSIT RATES ( L O N D O N )
P APER-Fully
LU . K . HIRE PURCHASE
FINANCE C O M P A N Y
Hedg
'
IVi
;i„
U U r M Z
per
I N T E R E S T A R B I T R A G E , U N I T E D STATES / C A N A D A
- MONTH
3
}
T R E A S U R Y BILL RATES
-
-
1 V J < f \
| (UNITED STATES
I 1 1 l 1 1 l 1 1
1 1 1 II
-
1
1 1 1 1 1 1
I |
1 1
1 1
1 1
1 1
1 1
1 1
1
RATE D I F F E R S N T I A L A N D F O R W A R D C A N A D I A N D O L L A R
S r i U O I N FAVOR OF CANADA
f
/
W
r— 3 - M O N T H C O V E R E D
lV
F O I W A I D RATI
RATE D I F F E R E N T I A L S
(NET
INCENTIVES)-r
vC
j-F A V0 R U . J ^
F A V O R CANADA
TREASURY RILLS
M
J
S
D
M
1962
*1 Thundoy (iflur»i t96 2, Friday thereafter,
J
S
19 63
D
M
J
S
l I 1 11 I I l_
19 6 4
D
M
_LL
J
S
ITiT
D
INTEREST A R B I T R A G E , NEW Y O R K / L O N D O N
3 - M O N T H T R E A S U R Y BILL RATES
A
1
R A T E DIFFE:REN1riAL /< n d
I f ' o r w A RD STER L I N G
|
:3 - M O NTH
1
i
R OF L O N D O N
READ.
-
K — z
X
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r
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%
FORW
J
!
1
yJ
/
i i
I
|
I
|
1 1
1 1
11
1 1
1 1
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
1
K
i i iV 4
1
l±-J_
1 1
(NET I N C E N T I V E )
1965j
1 1
INTEREST A R B I T R A G E FOR G E R M A N C O M M E R C I A L B A N K S
3 - M O N T H T R E A S U R Y B I L L S , I N T E R B A N K L E N D I N G RATE A N D
,
E U R O - D O L L A R D E P O S I T RATES
------ - r
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 I N F A V O R OF F R A N K F U R T
I N T E R B A N K LOAN RATE
l./X
"V
i
I
I
1
r
T
T.
T
I
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 )
vvi
1963
19 64
19 65
S H O R T - T E R M I N T E R E S T RATES *
\
CANADA
/-V _
SWtTZERUND
1961
"X",3 month treo«u7y bill ralei for oil counlriei except Japan •
and Switzerland (3 month deposit role)
1144
(Average rate on bank loom and discounts)
19tS
L O N G - T E R M B O N D YIELDS
J
—
v
Ch«H 7
INDUSTRIAL
STOCK
INDICES
lelle
;
SWITZEIUND^/
!JSO!
300,
ISO
*
Swiss Bonk Corporation induslriol Hock.
* *
Japan; index of 2 2 5 induilriol and other i slocks traded on the Tokyo exchange ,
Cfcert 8
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
»»t
Abov
pof
Ith.
F R W C H FRANCO
I C L G I A N FRANC
/X
3 - M O N T H F O R W A R D J E X C H A N G E RATES
Friday
figure;
A G A I N S T U.S. DOLLARS
r~r~r
A G A J N ST P OU N D STE R L I N G - L ON D O N
A G A I N S T POUND STERLING - L O N D O N
,
196 3
v
V
19 6 4
196 5
H. 13
No. 194
May 5, 1965
Latest Figures Plotted In H. 13 Chart Series , 1965
Per cent
per annum
Chart 1
Upper panel
(Friday, Anril 30 ,
except as noted)
(Wednesday,
April 28 )
Treasury
Euro-$ deposit
4^25
U.S. certif. of deposit
A^3Q
Lower panels
(Friday, April 30
Euro-dollars:
)
Call
7-day
30-day
90-day
180-day
Finance Co. paper:
4. 12
4. 31
4.50
4.81
5.00
U.S.
Canada
Hire-purchase paper, U.K.
U.K.
6.20
Germany
3. 12
Canada
3.71
Swiss 3-month deposits
(Date: March 15 )
3.06
Euro-$ deposit (London)
4.81
Japan: composite rate
(Date; Dec. 31
)
7.990
Bonds:
U.S. govt.
April 28
(Wed.,
Canada
U 1
U.S.
3.90
-0. 19
Forward Canadian dollar
+0. 34
Net incentive (Canada +)
+0. 15
April 30 )
U.K.
6. 20
U.S.
3. 90
Spread favor U.K.
+2.30
Forward pound
-2. 33
Net incentive (U.K. +)
-0.03
description and sources
Digitized for For
FRASER
September 23, 1964.
4.17
U.K. war loan
(Thurs.,
April 29
German Fed. Railway
(Fri. ,
April 23
Swiss Confederation
(Fri.,
April 23
Canadian govt.
(Wed.,
April 21
Chart 3
(Friday,
3. 90
5.10
Spread favor Canada
Treasury bills:
U.S.
Chart 6
April 30 )
Treasury bills;
bills:
4.90
Char t 2
(Friday,
Per cent
per annum
Chart 5
)
_)
6. 56
6.72
J *
J
5.04
Netherlands government
perpetual
(Fri.,
April 16
)
Additional rate:
(Thurs., April 15
5.03
)
of data see special annex to H. 13 Number 164,
@FedFRASER