The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
DIVISION OF INTERNA.TNOMSL FINANCE^
5 1962
H. 13 I prnrH.Rt 1No. 83
,- .
BOARD OF OOVERNORS
I
FEDERAL RESERVE SYSTEM
|
%
November 2 , 1962
/"CAPITAL MARKET DEVELOPMENTS ABROAD
Io France
IIo Japan
IIIo Nine Charts on Financial Markets Abroad
Io
France g Money and Capital Markets i n 1962
Conditions i n French money and c a p i t a l markets improved during
1962 s added i n part by a continuing payments surplus and by a s o l u t i o n of
the Algerian problem 0 By mid-summer, bond and money market y i e l d s had
f a l l e n below the average f o r 196l» New s e c u r i t y i s s u e s t o t a l l e d #1,7 b i l l i o n
during 1961 and were larger i n the f i r s t two quarters of 1962 than i n the
same period a year e a r l i e r o An easing of l i q u i d i t y pressures on the banks
contributed to a lowering of day-to-day money r a t e s .
International transactions (including trade and i n v i s i b l e s surpluses
and c a p i t a l inflow) produced a payments surplus, adjusted for special
transactions 5 of $1.2 b i l l i o n i n 1961 and of $ 1 . 1 b i l l i o n for the f i r s t nine
months of 1962» As a r e s u l t , the French franc has remained a t i t s upper
s e l l i n g p r i c e against the U0S6 d o l l a r .
In the stock market, the uptrend i n stock p r i c e s was maintained
longer i n Paris than i n any ether western f i n a n c i a l centerj the index
reached an a l l - t i m e peak of 796 (I9h9™100) f o r the week ending April 27» Since
then p r i c e s have f a l l e n sharply. Prices f e l l 15> per cent i n the May and
early June worldwide shake-out i n shares, and again i n October as French
p o l i t i c a l controversies deepened 0 On October 19, the index was a t a new
low f o r the year, about 7olt per cent lower than prices three weeks earlier#
With the Cuban c r i s i s , prices f e l l a further k per cent between October 19 and 21*.
Despite favorable economic developments, the price of the gold
"Napoleon" coin has r e f l e c t e d the e f f e c t s of p o l i t i c a l developments within
and outside France „ The price rose continuously during 1961 and the e a r l y
weeks of 1962 but then declined as the Algerian problem neared a f i n a l solution»
The coin price was a t a d a i l y low of NF 39.20 on April 27» The mid-year
movement out of the d o l l a r .brought the Napoleon t o over NF U0 and the price
exceeded NF Ll i n October as domestic p o l i t i c a l conditions deteriorated. With
the Cuban c r i s i s , the coin price reached NF U3»50 on October 2U (the highest
price since 1957) but f e l l to NF UloUO on the following day.
Money market„ During 1962, money market rates moved up during the
f i r s t f i v e months of the year but declined s u b s t a n t i a l l y a f t e r May. An easing
of pressures on the l i q u i d i t y p o s i t i o n s of the banks contributed to the lower
l e v e l of rates i n recent months. Because of s p e c i a l features of the Paris money
market, however, a brief discussion of i t s structure i s a necessary prelude
to any review of market r a t e s .
OFFICIAL USE ONLY
DECONTROLLED AFTER SIX MONTHS
OFFICIAL USE ONLY
-
2 -
Structure of money market* One of the f e a t u r e s of the French
money market, which d i f f e r e n t i a t e s i t from money markets i n other c e n t e r s ,
i s the absence from the market of corporations , other non-financial i n s t i t u t i o n s ,
"and. i n d i v i d u a l s . As a r e s u l t , the s o - c a l l e d Treasury b i l l s ("bons du Tresor")
are of two basic t y p e s . The " b i l l s " which may be held by owners other than
financial, i n s t i t u t i o n s are r e a l l y medium-term instruments with maturities of
one to f i v e years, and they do not have a market; most of them are redeemable
any time a f t e r three months from date of i s s u e and the y i e l d r i s e s with the
l e n g t h of time f o r which the b i l l i s h e l d .
Buyers and s e l l e r s i n the Paris market (other than intermediaries)
are l i m i t e d p r i n c i p a l l y to the commercial banks, the Bank of France, and
various public and private f i n a n c i a l i n s t i t u t i o n s , including two governmentc o n t r o l l e d f i n a n c i a l g i a n t s , the Caisse des Depots e t Consignations and the
Credit National, There are i n f a c t two important money markets, one f o r
Treasury b i l l s held by f i n a n c i a l i n s t i t u t i o n s with accounts a t the Bank of
France, arri one f o r private c r e d i t instruments,. The Treasury b i l l s , which
the banks are required to hold i n prescribed amounts, are issued on tap a t
a f i x e d rate which changes only i n f r e q u e n t l y . Maturities run from about 90
days to about two y e a r s , but most are two-year b i l l s « The other i n s t r u m e n t s s o - c a l l e d "private paper"—include bankers acceptances, export paper, and
miscellaneous types of short-term"paper i s s u e d , accepted, or guaranteed by
government i n s t i t u t i o n s . Money market transactions a g a i n s t both types of paper are
carried out through the intermediation of brokers and the Paris discount
houses. The houses buy or s e l l money market instruments en pension, i . e . ,
with a contract to repurchase or r e s e l l within a very short period. Rates
i n the market are determined by the d i f f e r e n c e between the i n i t i a l and
repurchase p r i c e s . The most common period of the pension i s one day, and the
only money market r a t e s regularly quoted are those f o r day-to-day money0
The Paris money market i s thus e s s e n t i a l l y a c a l l money market
using money market paper, rather than loans, as the instrument d e a l t in„ The
discount houses operate witii very small p o r t f o l i o s , matching s a l e s a g a i n s t
purchases from hour to hour. .
The market i s much a f f e c t e d by the operations of the Bank of
France, The bank of i s s u e intervenes to iron out short-term f l u c t u a t i o n s
without a f f e c t i n g the basic d i r e c t i o n of the market. In a d d i t i o n , the Bank
of France a l s o engages, on a l i m i t e d s c a l e , i n open-market operations as a
means of c r e d i t c o n t r o l . At present, the Bank of France makes agreements with
individual banks by which i t stands ready to hold money market paper up to a
given amount a t a given time. Under these arrangements, i t buys private paper
en pension a t the basic discount r a t e , and buys o u t r i g h t , a t t h e lower rate
of 3 per c e n t , Treasury b i l l s with a maturity l e s s than three months.
OFFICIAL USE ONLY
OFFICIAL USE ONLY
- 3 -
However, these open-market operations are a rather minor
adjunct to the twin p i l l a r s of French c r e d i t controlss discount c e i l i n g s
and the l i q u i d i t y r a t i o . French commercial banks t r a d i t i o n a l l y have heavy
recourse to the central bank ( p a r t l y because currency i s a higher percentage
of money supply than i n most developed c o u n t r i e s ) . Rediscounts are of shortterm ( i . e . , not over three-month) commercial b i l l s (not d e a l t i n on the
"money market") and are regarded as s a l e s t o the Bank of France rather than
as borrowings from i t « Rediscounts are made a t the basic discount r a t e ,
currently 3°!? per cent, up to the amount of the c e i l i n g s and a t penalty rates
when i n excess of the c e i l i n g „ At present, rediscounts exceeding a bank's
c e i l i n g by not more than 10 per cent are made at iu3> per cent, and further
rediscounts a t 6 per cento Export paper, however, i s rediscounted a t a
p r e f e r e n t i a l rate of 3 per cento Rediscounts above the c e i l i n g are made
on the en pension system.
The l i q u i d i t y r a t i o , imposed i n January 1961, prescribes that a
minimum percentage of banks' deposit l i a b i l i t i e s be held i n the form of these
a s s e t s i cash, balances with the Bank of France aid the Treasury, Treasury
b i l l s , medium-term paper (over three months and up to f i v e y e a r s ) , export
paper, and paper endorsed by the government Office of Cereals. The r a t i o was
raised from the i n i t i a l 30 per cent to 32 per cent i n February 1962. There
are s t i l l no c e i l i n g s on Bank of France rediscounts of export paper s
"cereal paper," and v i r t u a l l y a l l types of medium-term paper. This has been
a weak point i n the French c r e d i t control mechanism. But the danger has been
much reduced by the new l i q u i d i t y r a t i o requirement, which g r e a t l y l i m i t s the freedom of the banks to rediscount these instruments.
A subsidiary requirement i s one prescribing that banks 1 Treasury
b i l l holdings equal a t l e a s t a minimum percentage of deposit l i a b i l i t i e s
(the s o - c a l l e d Treasury b i l l " f l o o r " ) . This minimum percentage has r e c e n t l y
been reduced, i n s e v e r a l s t e p s , from 25 per cent ( i n e f f e c t from 1956 u n t i l
January 31, 1961) t o l £ per cent on February 28, 1962. This reduction, which
r e f l e c t s the easing of the Treasury's cash p o s i t i o n , was made p o s s i b l e without
jeopardy to f i n a n c i a l s t a b i l i t y by the i n s t i t u t i o n of the more comprehensive
l i q u i d i t y ratio5 i n the absence of t h i s l a t t e r , banks might have r i d themselves
of r e l a t i v e l y l o w - y i e l d i n g , unrequired Treasury b i l l s and used much of the
proceeds f o r expanding short-term credits 0 .
Money market r a t e s d i f f e r as between dealings i n Treasury b i l l s
and dealings i n private paper, the r a t e s on the former being lower and a l s o
l e s s i n d i c a t i v e of market l i q u i d i t y . The reasons for t h i s are ( l ) the ^compulsory
f l o o r on banks' Treasury b i l l holdings, which tends to r e s t r i c t t h e i r use f o r
adjusting banks' cash p o s i t i o n s , and (2) the f a c t that the tap rate f o r newly
issued Treasury b i l l s i s below the rediscount r a t e . In general 5 the private
paper rate tends to s e t t l e near the Bank of France's basic discount rate (at
present 3»5 per cent) at times when the banks are not rediscounting a t penalty
rates•
OFFICIAL USE ONLY
OFFICIAL USE ONLY
•Recent d e c l i n e s i n day-to-day money r a t e s . Day-to-day
money rates moved up sharply during the f i r s t f i v e months of 1962» The
average rate on private paper rose from 3.51 per cent i n January t o 3°98
per cent i n May and—that on Treasury b i l l s from 3»U0 per cent i n January t o
3O6U per cent i n April Q (See Table 1®) Thereafter r a t e s f e l l sharply and
the rate on private paper was about 3*38 - 3»50 per cent i n mid-October.
The money market began t o tighten i n l a t e February when the
required reserve r a t i o was raised<, and advanced further i n March and April„
-The private-paper rate reached a peak of 8 to 8 - 1 / 2 per cent on April 30
and May 2 c During March and April,, the banks approached and i n l a t e April
exceeded their discount c e i l i n g s ; as a r e s u l t , they were forced to rediscount
at the lw5 per cent and the 6 per cent penalty rates 0 The banks could not
rediscount medium-term paper (on which there i s no c e i l i n g ) because they needed
these a s s e t s to s a t i s f y the l i q u i d i t y r a t i o requirement„
By mid-Mayf however, the banks had ceased their o v e r - t h e - c e i l i n g
rediscountingo Since t h i s rediscounting was on an en pension basis,, i t could
be quickly terminated„ As a result,, by May 17 the rate against private paper
dropped to 3=1/2 to 3=5/8 per cento A new r i s e to 3°3/U to 3-7/8 per cent
at the end of May merely r e f l e c t e d the usual end-of-month tightening „ From
June t o mid»0ctober s rates against private paper have f l u c t u a t e d rather narrowly
around 3-1/2 per cento
Rates on new i s s u e s of Treasury b i l l s held by financial, i n s t i t u t i o n s ,
sold on tap 5 have been unchanged since they were reduced on March 12 s 1962.
The rate on two-year b i l l s (comprising 95 per cent of t o t a l b i l l s ) was reduced
from the 3=3/8 per cent rate s e t i n December I960 t o 3 - l A per c e n t . This
reduction was part of a move to d i r e c t more funds into medium- and long-term
investments and was followed by reductions on April 11 i n the r a t e s on Treasury
b i l l s held by non-financial owners.
Bond marks to During the f i r s t s i x months of 1962 s long-term bond
y i e l d s moved around a f l a t trend 2. which.was c l o s e t o the annual average and
end-of-year y i e l d s f o r 1961 0 In July and August s however <, there was a decided
easing i n long-term y i e l d s 0 (See Table 2, page 6 = )
Following t h e i r decline i n July-Augustg most long-term y i e l d s rose
i n September2 although the y i e l d on the 5 per cent rente of 1956 remained a t
the end-ef-August l e v e l „ In the f i r s t half of October 5 y i e l d s continued
to r i s e , and the upward movement t h i s time included a sharp jump i n the y i e l d
on the 5 per cent rente of 1956„ (See Table 3, page 6») The r i s i n g y i e l d s
i n October coincided with the sharp break i n French stock p r i c e s touched o f f
by the p o l i t i c a l impasse»
OFFICIAL USE _0NLY
OFFICIAL USE ONLY
: Short-Term I n t e r e s t Rates
Table 1,
Treasury b i l l
i s s u e rates
1-year
3.13
1961-average
Day-to-day money
Private
Treasui
paper
bills i
2-yrs.
3.65
3.38
3.45
Monthly averages
1962 —
January
3.13
3.38
3.51
3.40
February
3.13
3.38
3.56
3.39
-^.38-3.25
3.65
3.47
H. ,13-3.00
March
April
3.00
3.25
3.93
3.64
May
3.00
3.25
3.98
3.46
June
3.00
3.25
3.59
3.38
July
3.00
3.25
3.66
3.38
August
3.00
3.25
3.46
3.23
dates:
September 6
3.00
3.25
3 .38-3.50
3.13
13
3.00
3.25
3 .25-3.38
3.13
20
3.00
3.25
3.50
3.25
3.63
3.50
3.00
3.25
October 4
3.00
3.25
3,.38-3.50
11
3.00
3.25
3.50
3.38
18
3.00
3.25
3,.38-3.50
3.38
27
a/ B i l l s issued to f i n a n c i a l i n s t i t u t i o n s .
b/ Rate changed March 12.
OFFICIAL USE ONLY
• -
'
3.38
OFFICIAL USE ONLY
Table 2 .
France;
Monthly Bond Y i e l d s , 1961-1962-'
Perpetual
r e n t e 5$
1961 average
1962 - end of month
-
3/
b/
5.07
L.58
6.57
U.9U
U.U9
L.56
hoh9
6.5L
6.70
5.13
5.15
5.15
5.07
U.52
U.53
k.9l
li-22
6060
U.U8
S.io
6.#
6,52
6oli9
6 o i;0
6.37
U.63
Calculated by t h e I n s t i t u t N a t i o n a l e de l a S t a t i s t i q u e e t des Etudes
Economiques«
Excludes indexed bonds 0
Table 3»
France:
sJ
Recent Weekly Bond Y i e l d s , August t o October-'
Public
sector
Week ending;
Aug,
3
31
Sept, 7
Ik
21
28
Oct.
5
12
a/
Corporate
bonds£/
Gov't, /
bonds—
5.02
K :
March
April
May
June
July
August
/
Non-indexed
bonds
6.10
6.15
6.15
6.15
6.15
6.10
6.13
6.12
5.L2
5.36
5.L2
5.L8
5.51
5.5o
5.50
5.53
Calculated by t h e Bank o f F r a n c e .
OFFICIAL USE ONLY
5$ r e n t e
of 1956
Dayr
Augo
2
30
-Sept, 6
13
20
27
h
11
17
5.30
5.13
5.1U
5oiii
5.13
5oiU
5,31
5.33
5.36
= 7 =
OFFICIAL USE ONLY
Stock marks t«, During the decade of the 1950 ° s the French stock
market enjoyed a tremendous boom comparable to the uptrend in other major
f i n a n c i a l centers. The end of the long b u l l market came l a t e r i n France than
i n any other important country. The a l l - t i m e pea}c was not reached u n t i l the
week ending April 27, 1962, when the index (19U9-100) of a l l French common
stocks quoted on the Paris bourse was 796 0 In April the average y i e l d on
these stocks had been driven down to 1,U3 per c e n t .
In May and the f i r s t half of June 1962, French stock p r i c e s p a r t i c i p a t e d
i n the severe world-wide stock market decline» The new weekly index (December
29 5 1961=100) of a l l French common stocks quoted on the Paris Bourse f e l l
from the a l l - t i m e peak of IIU08 i n the week ending April 27 to 97 °5 i n the
week ending June 15 j> a f a l l of 15 per cento (See Table Uo) However, the dayto-day and week-to-week movements i n t h i s period d i f f e r e d considerably from
those on Wall S t r e e t because French p r i c e s were influenced by developments
i n Algeria and s t r i k e s i n France as w e l l as by stock price movements i n the
U0S0 and elsewhere 0 The d e c l i n e i n stock p r i c e s from t h e i r a l l - t i m e peak
was proportionately l e s s severe i n France than i n the U.So, Switzerland, and
some other important markets o French p r i c e s recovered somewhat i n l a t e June
and i n July, and then remained nearly unchanged i n Augus t- and September s the
index (December 29, 1961=100) f o r the f i n a l week of September being 103.6.
In August the average y i e l d was s t i l l as low as l c 6 5 per c e n t ^
The French p o l i t i c a l c r i s i s which broke out a t the beginning of
October caused p r i c e s to f a l l each day from September 28 to October 9 J following
three days of recovery, a new week-long decline s e t i n . These d e c l i n e s ,
caused more by a drying-up of demand and by s e l l i n g by f o r e i g n e r s than by a
general increase i n s e l l i n g o f f e r s , - c a u s e d the weekly index to. f a l l to 97 f o r
the week ending October 19, a l e v e l 7oh per cent lower than that of three weeks
e a r l i e r and a new low for the year.
Recent international tensions over Cuba sent French stock p r i c e s s t i l l
further downward, a f a l l of k per cent between the 19th and 2Uth of October
being r e g i s t e r e d by the d a i l y index of French common stocks 0 (The d a i l y index
i s based on' stocks with a value equal to about 52 per cent of the value of a l l
stocks traded on the Paris Bourse, as opposed to the 100 per cent coverage of
the weekly index. This d i f f e r e n c e accounts for the notable discrepancies
between the two s e r i e s . )
Table L.
Weekly index
Week endings
Apr. 27
June 15
Sept, 28
Oct. 5
12
19
France2 Indexes of Common Stock P r i c e s
(Dec* 29, 1961 = 100)
Daily index.
. Day:
.. Sept. 28
Oct,
9
12
19
22
23
2h
111.8
97.5
103.6
98.7
99.0
97.0
OFFICIAL USE ONLY
99,2
90.8
93.6
91.1
89.6
&9.0
89.3
OFFICIAL USE ONLY
=> 8
°
New i s sues„ The p u b l i c s a l e of s e c u r i t i e s i s a r e l a t i v e l y l e s s
i m p o r t a n t method c-f r a i s i n g c a p i t a l i n France t h a n i n a number cf o t h e r c o u n t r i e s 0
In the t h r e e y e a r s 1958~60 5 n e w i s s u e s of s e c u r i t i e s e q u a l l e d 16 p e r c e n t of
g r o s s f i x e d c a p i t a l f o r m a t i o n ( p l u s a d d i t i o n s t o s t o c k ) i n France compared
t o 38 p e r c e n t i n the United S t a t e s , 2k p e r c e n t i n t h e United Kingdom and
I t a l y o and 19 p e r c e n t i n t h e N e t h e r l a n d s „ T o t a l new i s s u e s i n France d e c l i n e d
from $1 s 76U m i l l i o n i n 1958 t o $l s UlO m i l l i o n i n i960c, mainly because t h e
Government has not needed t o borrow a t l o n g - t e r m on t h e c a p i t a l market s i n c e
1958O I n addition«, t h e n a t i o n a l i z e d e n t e r p r i s e s borrowed l e s s from the market»
New i s s u e s by p r i v a t e e n t e r p r i s e s 5 however s r o s e from $583 m i l l i o n i n 1958 t o
$861 m i l l i o n i n I 9 6 0 . (See Table 5 , )
I n 1961, t o t a l new i s s u e s i n c r e a s e d 26 p e r c e n t t o $ l s ? 8 2 m i l l i o n . A l l
c a t e g o r i e s of b o r r o w e r s tapped the market t o a g r e a t e r e x t e n t than i n t h e p r e vious y e a r , r e c o u r s e by p r i v a t e e n t e r p r i s e s r i s i n g 25 p e r cent, and e x c e e d i n g
^billion.
Compared w i t h t h e c o r r e s p o n d i n g q u a r t e r of l a s t year9 new i s s u e s i n
1962 were up 25 p e r c e n t i n t h e f i r s t q u a r t e r , , b u t were down 9 per c e n t ill the
s e c o n d . For the f i r s t h a l f of t h i s y e a r , t h e r e was a 7«9 p e r c e n t i n c r e a s e
over the same p e r i o d l a s t y e a r , w i t h i s s u e s of p r i v a t e e n t e r p r i s e s i n c r e a s i n g
mere than 9 per cento These i n c r e a s e s a r e l a r g e 5 a l t h o u g h w e l l under t h e
very heavy y e a r - t o - y e a r i n c r e a s e s r e g i s t e r e d i n 196l»
T a b l e 5»
France:
New P u b l i c I s s u e s , | j / (i960 t o 1962)
(Millions of U„S0 dollars)
I960
Year"
Government
Public bodies
Savings-collecting institutions
Nationalized enterprises
Private enterprises:
stocks
bonds
participations
Other
TO'IAL
a/
Year
1961
I
h
215
30U
861
135
381
U5
26
k9
321
330
1,080
765
123
h9
-
-
1,1+10
1,782
50L
-
71
176
257
170
73
1U
Excluding i s s u e s of T r e a s u r y b i l l s o
OFFICIAL USE ONLY
1962
r r
hl
182
U7
251
162
79
10
-
527
=
182
205
2L5
178
L9
18
2
111
57
310
P09
85
•12
=
632
L80
OFFICIAL USE ONLY
Gold m a r k e t . The p r i c e of the "Napoleon" (French 2 0 - f r a n o gold
p i e c e ) , a t r a d i t i o n a l French b a r o m e t e r of f i n a n c i a l " c o n f i d e n c e " , a v e r a g e d
NF 36,62 i n i 9 6 0 . But i t r o s e c o n t i n u o u s l y i n 1961 t o a peak of NF U3»20 on
January 1 8 , 1962, s h o r t l y a f t e r S e c r e t Army terrorism began to sweep over
France a s w e l l a s A l g e r i a „ As t h e n a t i o n moved towards a f i n a l s o l u t i o n of
t h e A l g e r i a n p r o b l e m , the p r i c e of the Napolecn d e c l i n e d t o a r a n g e of NF 39-UO
i n April-May ( s e e Table 6 ) . The low f o r 1962 was NF 39,20 on A p r i l 27o
There was some r i s e i n w o r l d gold p r i c e s i n l a t e June and t h e f i r s t
t h r e e weeks of J u l y . T h i s c o i n c i d e d w i t h h e a v y movements out of t h e d o l l a r
which were s u b s e q u e n t l y b r o u g h t t o an end by P r e s i d e n t Kennedy's d e t e r m i n a t i o n
t o d e f e n d t h e p a r i t y of t h e d o l l a r v o i c e d a t h i s T e l s t a r news, c o n f e r e n c e on
J u l y 2 3 . The p r i c e of t h e Napoleon r o s e i n t h o s weeks, touched NF I4O0 There
o c c u r r e d a renewed r i s e t o around NF I4I i n e a r l y A u g u s t , and t h e p r i c e
f l u c t u a t e d around t h i s l e v e l t h r o u g h t h e end of September»
The o u t b r e a k of t h e F r e n c h p o l i t i c a l , c r i s i s i n t h e f i r s t week of
October caused a r i s e from NF U0»90 on September 28 t o NF liloTO on October 8 ,
b u t t h e p r i c e t h e n sank t o NF U l . 2 0 on October 1 2 . The Cuban c r i s i s s p a r k e d
a r i s e t o NF U3»50 on October 2k ( t h e h i g h e s t p r i c e i n f i v e years)<, but t h e
e a s i n g of t e n s i o n s b r o u g h t t h e Napoleon down t o NF itl»U0 on October 2,5.
Table 6 .
Frances
P r i c e of t h e ^Napoleon" Gold Coin
( i n new f r a n c s )
1960 - a v e r a g e
36,62
1961 - a v e r a g e
.39 = 30
1962 - monthly a v e r a g e s s
January
February
March
April
May
June
July
August
U2.73
U0.63
L0,bl
39.60
39.71
39.98
liO.lS
UO08I
1962 - s e l e c t e d d a t e s 2
.Tannqry 18
AprLl 27 (low)
J u l y 23
September 28
October 8
12
18
2h ( h i g h )
25
-
,
^
U3»20
39.20
10.60
U0»90
Ulo70
LI.20
Li.20
U3.50
UloUO
OFFICIAL USE ONLY
OFFICIAL USE ONLY
~
10 -
Foreign t r a d e . Aided by d e v a l u a t i o n , the subsidence of domestic
i n f l a t i o n a r y p r e s s u r e s , and boom c o n d i t i o n s i n other C o n t i n e n t a l countri.es,
French e x p o r t s i n c r e a s e d 10 p e r c e n t i n 1959 and 22 per c e n t i n I 9 6 0 . But
s i n c e July 1961, s e a s o n a l l y - a d j u s t e d e x p o r t s have f a i l e d to expand, and i n
r e c e n t months have tended s l i g h t l y t o d e c l i n e » S e a s o n a l l y - a d j u s t e d e x p e r t s
averaged $619 per month i n the t h i r d q u a r t e r of l a s t year (see Table ?<, page 11)
compared with t h e average monthly r a t e during 1962 of §620 m i l l i o n i n the f i r s t
q u a r t e r , $602 m i l l i o n i n the second q u a r t e r , and $602 m i l l i o n i n July-August«,
Concurrently, s e a s o n a l l y - a d j u s t e d imports have been r i s i n g , from an average
monthly r a t e of $5U8 m i l l i o n i n the t h i r d q u a r t e r of 1961 tc $58? m i l l i o n i n
t h e second q u a r t e r of 1962 s and more r e c e n t l y t o $621 m i l l i o n i n July-Angusbo
The average monthly t r a d e balance has consequently shown diminishing s u r p l u s e s ,
and a d e f i c i t i n July-August
However, t h i s d e c l i n e has not cut i n t o Fran2e c s e a r n i n g s of f o r e i g n
exchange because the s t a g n a t i o n of t o t a l e x p o r t s i n the p a s t y e a r has' been
caused by d e c l i n i n g s a l e s t o A l g e r i a and o t h e r p a r t s of the overseas f r a n c
a r e a . Compared with the y e a r - p r e v i o u s p e r i o d s , u n a d j u s t e d e x p o r t s to f o r e i g n
c o u n t r i e s ( i 0 e o g , c o u n t r i e s o t h e r than t h e overseas f r a n c a r e a ) were up 10
per cent i n t h e second q u a r t e r of t h i s y e a r and up ? per cent, i n July-August»
The t r a d e balance with f o r e i g n c o u n t r i e s ( i 0 e . , c o u n t r i e s o t h e r than t h e o v e r seas f r a n c a r e a ) were up 10 per c e n t i n the second q u a r t e r cf t h i s year- and
up 7 per cent i n July-August-. The t r a d e balance w i t h f o r e i g n c o u n t r i e s (unadj u s t e d ) i n t h e f i r s t half of t h i s y e a r was more f a v o r a b l e than i n the same
period i n 1961« Although t h e r e was a d e f i c i t on t r a d e with f o r e i g n c o u n t r i e s
i n July-August 1962, as a g a i n s t a l a r g e s u r p l u s i n July-August 1961, t h i s
l a s t comparison i s not a good one because French imports, s e a s o n a l l y a d j u s t e d ,
have f l u c t u a t e d widely and were e x c e p t i o n a l l y lew i n July-August of l a s t y s a r 0
The l a c k of expansion i n t o t a l e x p o r t s h a s , cf c o u r s e , been an
unfavorable development f o r French e x p o r t e r s , and has a c t e d as a brake- on
the expansion of aggregate demand i n France# But because i t d e r i v e s from a
d e c l i n e i n s a l e s to the f r a n c a r e a , i t has not a d v e r s e l y a f f e c t e d t h e balance
of payments,
Foreign exchange r e s e r v e s 0 Perhaps t h e most s t r i k i n g s i n g l e aspectof the r e c e n t French economic s i t u a t i o n has been the v e r y l a r g e balance cf
payments s u r p l u s e s r e g i s t e r e d over t h e p a s t f o u r - y e a r s , i . s . , s i n c e the
t e r m i n a t i o n of i n f l a t i o n a r y f i n a n c i n g of government e x p e n d i t u r e s and t h e
d e v a l u a t i o n of the f r a n c i n December 1958» In 1961 the s u r p l u s , b e f o r e $320
m i l l i o n of advance d e b t repayments, exceeded $1.2 b i l l ! o n o
During the f i r s t nine months of 1962, t h e i n c r e a s e i n o f f i c i a l
r e s e r v e s ( a f t e r adjustments f o r d e b t prepayments, changes i n r e c i p r o c a l
balances w i t h t h e F e d e r a l Reserve System, and changes i n France S s IMF p o s i t i o n )
t o t a l l e d $1,076 million» Although t h e f o u r t h q u a r t e r i s s e a s o n a l l y the weakest
p e r i o d of the year f o r the French balance of payments, i t appears t h a t the 1.962
s u r p l u s w i l l approximately e q u a l t h a t f o r 196lo Actual and a d j u s t e d changes
i n o f f i c i a l r e s e r v e s i n 1961 a r e shown i n Table 8„ O f f i c i a l r e s e r v e s cf gold
and c o n v e r t i b l e f o r e i g n exchange, held by the Bank of France and the ExchangeS t a b i l i z a t i o n Fund, t o t a l l e d $3,530 m i l l i o n a t the end of September, of which
$2,U8l m i l l i o n was i n g o l d .
OFFICIAL USE ONLY
OFFICIAL USE ONLY
Tabic 7, French Foreign Trade: Total Trade and Trade with Foreign Countries
(In m i l l i o n s of d o l l a r s ; monthly average or month)
"
Total trade, seasonally-adjusted
Exports
Imports c , i . f .
1960 - year
572
1961 - year
Qtr. I
II
III
IV
602
58U
605
619
602
-
620
602
621
583
;
1962 - Q t r . I
II
July
Aug,
.Balance
5>2U
'L8
557
5U9
552
5U8
599
+U5
+35
+53
+71
+ 3
£/p76
587
618
62I4.
- +UU
+15
+3
-ill
Trade with f o r e i g n countries, unadjusted
Exports „
Imports c . i . f •
Balance
1960 - year
I4.OI
U05
~ U
1961 - year
Qtr. I
II
July
Aug.
hhh
U26
U50
U57
382
U32
h25
U50
U02
367
+12
+ 1
+55
+15
1962 - Qts I
II
July
Aug.
187
U96
519.
380
£/U71
L79
U86
1+20
+16
+17
+33
°L0
a/
Adjusted f o r change i n s t a t i s t i c a l procedure i n January 1962„
OFFICIAL USE ONLY
OFFICIAL USE ONLY
Table 8 .
France:
- 12
Changes i n O f f i c i a l R e s e r v e s g /
(In m i l l i o n s of U.S. d o l l a r s e q u i v a l e n t )
1962
Actual change
Qtr. I
Qtr. I I
July
Aug.
Sept.
+282
+263
z&L
+ 82
+116
- 28
+ 90
- 5o
+ 60
+356
Adjustments:
IMF p o s i t i o n
Debt prepayments t o U.S.
and Canada
Debt prepayments t o IBRD
+ 57
Reciprocal balances w i t h
Federal Reserve System
- 50
Adjusted change
+261
+ 50
+U13
+15U
+132
+116
a / Gold and c o n v e r t i b l e c u r r e n c i e s h e l d by the Bank of France and the Exchange S t a b i l i z a t i o n Fund.
b / The s i g n shows the d i r e c t i o n of t h e adjustment, and i s the o p p o s i t e of t h e e f f e c t of
the t r a n s a c t i o n on r e s e r v e s .
P a r t i a l data s u g g e s t an i n c r e a s e of about SU0 m i l l i o n i n o f f i c i a l
r e s e r v e s i n the f i r s t 18 days of October. This i s under the r a t e of gain i n
September of $116 m i l l i o n f o r the month. Because of s e a s o n a l f a c t o r s ( i n c l u d i n g
a d e c l i n e i n t o u r i s t r e c e i p t s ) , r e s e r v e a c c r u a l s can be expected to diminish
i n October; i n a d d i t i o n , p o l i t i c a l developments i n France i n e a r l y October
may p o s s i b l y have caused some changes i n c a p i t a l f l o w s .
P r i c e s and wages. Notwithstanding the end of i n f l a t i o n a r y f i n a n c i n g
of budget d e f i c i t s , France i s s t i l l t r o u b l e d by r i s i n g p r i c e s . The d e v a l u a t i o n
of the franc i n December 1958 caused p r i c e i n c r e a s e s i n e a r l y 1959» Since then,,
p r i c e s have moved e r r a t i c a l l y around a r i s i n g trend., Contributing to upward
p r i c e p r e s s u r e s have been the l a r g e balance-of-payments s u r p l u s , a l i b e r a l
bank c r e d i t p o l i c y , and very r a p i d l y r i s i n g wage r a t e s . The index of hourly
wages, shown i n Table 9> has r i s e n somewhat f a s t e r t h i s year than l a s t , and i n
July 1962 was 8.U per cent higher than i n July 1961a Wage i n c r e a s e have subs t a n t i a l l y exceeded p r o d u c t i v i t y g a i n s . Real GNP rose U.U per c e n t i n 1 9 6 l
and i s expected t o r i s e 5 per c e n t i n 1962 0
OFFICIAL USE ONLY
OFFICIAL USE ONLY
Table 9.
—
France:
Price and Wage Indexes f o r Specified Periods
(1956*100)
:
*
I960
Wholesale p r i c e s ^
General index
Foodstuffs
Ind. prod.
Consumer prices^^-^
General index
Food
All other excluding
—
beverages
- 13
TT
1961
ra
iv
i
1962
"TO
1
107.1
101.7
110.9
108.9
102.0
113.9
107.2 J- 110.1
98.2
10L.2
11U.3
115.0
113.2
111.0
115.0
112.8
110.9
UU.7
112.0
110.2
llU.6
111.9
108.5
115.5
111.1
107.2
111.9
108.6
lll.U
107.5
113.5
110.8
116.3
115.0
117.5
116.6
118.7
118.9
119. U
119.3
116.6
116.9
116.8
118.0
119.7
120.8
121.1
n.a.
i i
Export unit v a l u e - /
112
112
113
112
m
113
113
Hourly wages£^
115.3
117.5
119.6
122.2
121.1
126.9
129.3
a/
b/
c/
3/
i i i
n.a.
132.5
bind of quarter f i g u r e . : ~"~
Quarterly average.
F i r s t month of quarter indicated.
2 5 0 - a r t i c l e s index for Paris region.
The price indexes i n Table 9 show increases i n the general wholesale
price index of 2.8 per cent i n the year ended September 1961 and l e 6 per cent
i n the year ended September 1962. The consumer price index rose 2.2 per cent
i n the 12 months ending September 1961, and 5,2 per cent i n the 12 months ending
September 1962. At the wholesale l e v e l , prices of industrial products and materials
have been steady i n the past year, but prices of f o o d s t u f f s have r i s e n , i n part
because of higher agricultural support p r i c e s . At the r e t a i l l e v e l , both food
and non-food items have participated i n the general advance.
Despite r i s i n g internal p r i c e s , the export unit value index showed
scarcely any increase from the second quarter of I960 through the second
quarter of 1962.
Europe and British Commonwealth Section.
OFFICIAL USE ONLY
OFFICIAL USE ONLY
II,
Japan;^Money and Capital Markets i n September
During the past week, the Japanese a u t h o r i t i e s took steps to relax
the monetary controls put into e f f e c t i n July and September l a s t year t o r e s t r a i n
i n t e r n a l expansion and to r e s t o r e balance of Dayments equilibrium. On October 27
the Bank of Japan's basic discount rate w_s ^educed from 7 . 3 to 6=935 per cent
and the system of penalty discount r a t e s , which apply t o commercial bank borrowings i n excess of s p e c i f i e d amounts, was changed« The previous penalty rates of
1.U6 and 2.19 percentage points i n excess of the basic rate were changed t o 1.09$
and U.7U5 percentage p o i n t s . The Bank of Japan has indicated that i t w i l l extend
credit at the highest penalty rate only under rare circumstances. The new system
i s designed t o discourage e x c e s s i v e r e l i a n c e by the large banks on Bank of Japan
c r e d i t . E f f e c t i v e November 1 , 1962, commercial bank reserve requirements were
reduced by one-half f o r l a r g e - s i z e banks and one-third f o r medium-size banks.
The t i g h t money p o l i c y has been s u c c e s s f u l i n reducing
credit expansion and lowering both wholesale and export prices <,
production since May has been r e l a t i v e l y s t a b l e at a high l e v e l ,
on trade account has narrowed sharply i n the past year. Current
r e f l e c t primarily t h i s improvement on trade account as w e l l as
long-term c a p i t a l i s s u e s i n the U.S. i n September*
the rate of
Industrial
and the d e f i c i t
reserve gains
million in
Money Market. Money market conditions continued to remain t i g h t i n
September as net Treasury disbursements were more than o f f s e t by contractionary
developments. On the contractionary s i d e , Bank of Japan loans and discounts
declined ¥63 b i l l i o n , bank notes i n c i r c u l a t i o n rose ¥11 b i l l i o n , and Bank of
Japan holdings of government bonds f e l l ¥12 b i l l i o n . Only p a r t l y o f f s e t t i n g
t h i s was a net Treasury disbursement i n September of ¥62 b i l l i o n 0
Interest Rates. I n t e r e s t r a t e s are expected to f a l l i n November
following the reduction of the Bank of Japan's basic discount rate on October 27
from 7 . 3 t o 6.935 per c e n t . The commercial banks have customarily reduced t h e i r
structure of lending rates i n consonance with a change i n the central bank's
basic discount r a t e .
The average i n t e r e s t rate for bank loans and discounts continued t o
r i s e s l i g h t l y i n July. The July rate was 8 . 2 3 1 per cent compared to 8.227 i n
June. Since l a s t December, the average rate has moved up only s l i g h t l y . (See
table below). In the c a l l loan market, the rate f o r loans c a l l a b l e at a day's
n o t i c e remained at 11.68 per cent i n September, the same l e v e l as i n August.
Average Monthly I n t e r e s t Rates on Bank Loans and Discounts
March
June
September
December
1/
1959
I960
8.18
^8.08
8.06
8.11
8.21
8.22
8 . Hi
8.08
.
July
1961
1962
7.92
AM
8.00
80 20
8.22
8.23
8.23 1 /
-
OFFICIAL USE ONLY
OFFICIAL USE ONLY
Bank Loans and Discounts. Bank c r e d i t continued t o r i s e a t ' a slower
r a t e i n August than a y e a r e a r l i e r . The t o t a l r i s e i n c r e d i t i n August was 0 . 8
per cent compared t o 1 . 0 per cent a year e a r l i e r , with both loans and b i l l s d i s counted i n c r e a s i n g l e s s r a p i d l y . Deposit l i a b i l i t i e s were up 1 per cent i n
August a g a i n s t a 0 . 6 per cent r i s e i n August 1961,
For the July-August p e r i o d , the t o t a l r i s e i n bank c r e d i t was 2 , 1 per
cent compared t o 2 . 5 per cent a year e a r l i e r . The r a t e of i n c r e a s e for loans
and s e c u r i t y h o l d i n g s was t h e same, but b i l l s discounted r o s e l e s s r a p i d l y i n
t h e July-August p e r i o d t h i s y e a r . (See t a b l e below). Bank d e p o s i t s increased
1=3 per cent during the period i n contrast t o no change a year e a r l i e r .
Commercial Banks:
Quarterly Changes i n D e p o s i t s and Principal" Assets
(In b i l l i o n s of yen)
~~
~
MAIN
Deposits
i960
1961
1962
Per
cent
Change
Loans
Per
cent
Change
Bills
Discounted
"ASSETS
Per
cent
Change S e c u r i t i e s
Per
cent
Change
I
II
III
17
+2U9
+ 96
+^06
+607
3.U
1.3
6.5
7.3
+176
+167
+2Wi
+3li7
3.8
3.5
U.9
6.7
+ 5U
+ 87
+172
+185
2.5
3.9
7.5
7.5
+ 78
+ 75
+ 35
+127
I
II
July-Aug.
Ill
IV
+502
+169
- 2
+359
+130
5.7
1.8
3.8
Uo3
+326
+206
+151
+216
+232
5.9
3.5
2.5
3.6
3.7
+ U8
+133
+101
-.206
+220
1=8
L.9
3.6
7-3
7.2
+103
+10U
+ 13
- 1:3
+122
6.8
6,U
0,8
2.5
6.9
I
II
July-Aug.
+128
+ 61
+13U
1.2
0.6
1.3
+256
+181
+17U
3.9
2.7
2.5
+ Hi
+108
+ 69
o.U
3.3
2.0
= 61;
+258
+ 16
-3 oh
114 = 1
0.8
—
-
6.5
5.8
2.6
9.1
The proportion of bank loans and d i s c o u n t s extended f o r purchases
of equipment rose from 1 7 , 3 per cent i n July t o 17oU per cent i n August 5 the
same l e v e l as i n the second quarter of t h i s y e a r .
Bond Market
The t o t a l amount of new bond and debenture i s s u e s i n August was
¥91 b i l l i o n , down ¥2 b i l l i o n from t h e July l e v e l . While the July-August
l e v e l s were lower than i n the f i r s t quarter of t h i s y e a r , they were ¥ 6 b i l l i o n
above t h e second quarter average„ Between July and August, new i s s u e s of i n d u s t r i a l and p u b l i c corporate debentures d e c l i n e d ¥1 and ¥3 b i l l i o n 5 r e s p e c t i v e l y , and new i s s u e s of bank debentures rose ¥2 b i l l i o n .
OFFICIAL UST:
OFFICIAL USE ONLY
= 16 -
Average y i e l d s on l o c a l government- s e c u r i t i e s and public corporation
bonds remained unchanged i n August from the l e v e l s since the f i r s t of the year 0
Yields on bank and i n d u s t r i a l debentures rose s l i g h t l y in August 0
Stock Market„ Since reaching a high f o r the year l a s t February, the
stock market has generally trended down, and in October i t reached the lowest
l e v e l in two years. Between February lb and October 29, the market dropped 2b
per cent. During September and October the general trend was down except f o r a
b r i e f r a l l y i n the f i r s t week of October when minimum stock margin requirements
were reduced from Uo to 30 per cento To help b o l s t e r the market, commercial
banks extended new c r e d i t s to s e c u r i t y firms during October but so f a r there
have been no clear signs of a r e v e r s a l i n the downtrendc Immediately following
the reduction i n the Bank of Jap'an basic discount rate on October 27.9 the market
declined a A major f a c t o r i n the decline has been the reports of lower s a l e s and
p r o f i t s by Japanese companies c
Dow Jones Average of 225 Stocks
Tokyo Stock Exchange
Aug.
29
¥ 1,U25
Sept.
$
12
19
1,380
1,330
1,329
Oct.
3
10
17
2b
31
.¥ 1,2L0
1,302
1,216
1 , 2 hb
1,260
1961 .High
Low
¥ 1,830
¥ 1,2#
1962
¥ 1,590
¥ 1,216
High
Low
Foreign Trade. The trade balance continued to improve i n September
as seasonally adjusted exports rose $27 m i l l i o n t o $hb9 m i l l i o n and imports declined $7 m i l l i o n t o $Wi0 m i l l i o n (see table below) 0 This produced the f i r s t
surplus on trade account, seasonally adjusted, since October 1959 and brought
the third quarter trade d e f i c i t computed at an annual rate to $156 m i l l i o n , far
below the peak d e f i c i t i n the fourth quarter l a s t year of $2,18U million= With
the sharp narrowing i n the trade d e f i c i t t h i s year, and the s u b s t a n t i a l earnings
• from services and other i n v i s i b l e s , the Japanese have i n e f f e c t restored e q u i l i brium to t h e i r balance of payments„ These favorable developments were a major
f a c t o r i n the Government's decision to r e l a x the t i g h t money p o l i c y at the end
of Octobero The seasonally adjusted trade f i g u r e s (monthly, or monthly averages,
on a customs b a s i s i n m i l l i o n of d o l l a r s ) i n the table below are based on
seasonal adjustment factors computed by the Bank of Japan under the U.So census
methodo
OFFICIAL USE ONLY
OFFICIAL USE ONLY
* 17 -
Exports
Imports
Trade Balance
Year
3#
374
- 36
Year
I
II „
III
17
353
3L3
351
#7
36I4.
I184
- U27
U6u
-5o6
5L6
-131
-8L
. -113
-149
-182
I
Jan,
Feb,
Mar.
II
Apr,
May
June
III
July
Aug,
Sept,
371
351
382
378
U09
361
Wi7
I4.I8
U3U
U30
U22
hh9
.
L92
497
L98
181
U66
182
177 .
U35
;
bhl
U53
khl
UiO
-121
-143
-116
-103
- 57
-121
- 30
- 17
- 13
-23
- 25
+ 9
Early i n October the Government acted t o r e l a x p a r t i a l l y the t i g h t
money p o l i c y and t o help promote further export expansion,. E f f e c t i v e October 8 c,
advance deposit requirements f o r imports of certain raw materials were reduced
from 5 to 1 per c e n t . I t i s estimated that t h i s step w i l l . r e l e a s e about ¥ U
b i l l i o n of the ¥15«>7 b i l l i o n i n advance d e p o s i t s .
The Government a l s o announced early in October the foreign exchange
budget f o r the period from October 1, .1962, t o March 31*-19.63 o The t o t a l e x change budget was s e t at $U,U02 m i l l i o n which represented an increase of $kh3
m i l l i o n s or 11 per c e n t , over the budgeted f i g u r e f o r the previous s i x months=
Exchange Reserves and Capital Flows„ Japan's i n t e r n a t i o n a l reserves .
rose $72 m i l l i o n i n September to a l e v e l of $1,720 million,. Part of t h i s r e f l e c t e d $5# m i l l i o n i n long-term s e c u r i t y i s s u e s placed i n the United States in
September, (See Capital Market Developments Abroad of October 5<? 1962 3 f o r d e t a i l s
on these i s s u e s , )
Preliminary data indicate that reserves increased a further $85 m i l l i o n
in October to a- l e v e l of $1,805 m i l l i o n . I t i s l i k e l y that a large part of t h i s
gain r e f l e c t s the improved trade account since there were no reported i s s u e s of
s e c u r i t i e s i n foreign markets i n October, This l a t e s t gain brings reserves t o
a l e v e l $319 m i l l i o n above the c y c l i c a l low l a s t December,
The balance of payments <, as measured on an exchange transactions b a s i s s
improved further i n September as the surplus on current account rose t o $62 m i l l i o n compared t o $Ui m i l l i o n i n August, Net long-term c a p i t a l r e c e i p t s were
$79 m i l l i o n , as against $15 m i l l i o n i n August s and short-term c a p i t a l outflow was
OFFICIAL USE ONLY
OFFICIAL USE ONLY
"
- 18 -
$87 m i l l i o n , compared t o $30 m i l l i o n i n August. With net r e c e i p t s of $18 m i l l i o n
under errors and o m i s s i o n s , t h e o v e r - a l l balance r e g i s t e r e d a surplus of $72
million»
Japanese short-term l i a b i l i t i e s t o the United S t a t e s continued t o i n crease s l i g h t l y i n August, r i s i n g $2 m i l l i o n over the July l e v e l „ As i n d i c a t e d
i n the t a b l e below, l i a b i l i t i e s reached a peak of $1,698 m i l l i o n l a s t Marcha then
dropped $20 m i l l i o n i n April-May, and s i n c e t h e end of May have r i s e n only $5
million,
Feb.
Mar.
Apr.
May
June
1959
I960
1961
1962
168
175
20L
22k
2li2
260
362
372
120
L56
L88
U97
8#
952
1,069
1,1#
1,19.6
1,272
1,515
1,605
1,698
1,688
1,678
1,680
July
Aug.
Sept.
Oct.
Nov.
Dec.
1959
I960
1961
1962
256
269
262
262
275
32U
586
628
660
693
711
806
1,3101,335
1,288
1,281
1,292
l,Wi5
a/1,681
a / % 683
a / Preliminary e s t i m a t e .
Foreign Exchange. The exchange r a t e i n t h e spot market strengthened
suddenly i n the f i r s t week of September, moving from one end of the o f f i c i a l
range t o the o t h e r . Between September 1 and It, the y e n - d o l l a r spot middle r a t e
moved.from ¥361.10 t o ¥358.90 t o the d o l l a r ( s e e t a b l e b e l o w ) , and remained
there through October 15. This quick s t r e n g t h e n i n g was due mainly t o the cont i n u i n g improvement i n t h e balance of payments and the s e n s i t i v e nature of t h e
Japanese exchange market where the tendency has been f o r the exchange r a t e s t o
remain e i t h e r at the top or bottom o f f i c i a l i n t e r v e n t i o n p o i n t s c
' The discount between t h e spot and the three-month forward market
widened i n September as the forward r a t e weakened from a p a r i t y p o s i t i o n on
September 1 t o a discount of l . U i per cent per annum on September 2i|o In the
f o l l o w i n g weeks through October If? t h e spot and forward r a t e s remained unchanged.
Customer's T..T. Exchange Rates of Bank of Tokyo i n Tokyo
Date
Yen-dollar spot
middle r a t e
Three-month
f o r w a r d middle r a t e
Forward d i s c o u n t i n
p e r c e n t p e r annum
Aug.
31
361.10
361.10
__
Sept.
7
1It
21
359.%)
359.90
loll
loll
28
358.90
358.90
K8.90
358.90
360.10
360.20
1.33
lchh
5
12
15
358.90
358.90
358.90
360.20
360.20
360.20
l.W:
i=a
1.W+
Oct.
A s i a , A f r i c a , and L a t i n America S e c t i o n
OFFICIAL USE ONLY
INTEREST
ARBITRAGE,
UNITED
- T hu r^$ d o y f i o u r e $
THREE-MONTH TREASURY
STATES/CANADA
BILL R A T E S
P . r c . n , per annum
vvl
RATE
DIFFERENTIAL A N D
FORWARD
CANADIAN
DOLLAR
EXCHANGE
COVER
S P R E A D IN F A V O R OF C A N A D A +
f-S.
RATE
DIFFERENTIAL
WITH
FORWARD
N E T I N C E N T I V E I N F A V O R OF C A N A D A +
*
LLJ
-11
INTEREST
ARBITRAGE,
NEW
Y O R K / L O N D O N
Friday i i g u r« a
3-MONTH
RATE
-
Per t«nl pit annum
TREASURY
BILL
RATES
DIFFERENT^AL jAND^
3 - M O NTH
FORWARD
|
STERLING
S P R E A D IN ' F A V O R OF L O N D O N
fv—
RATE
DIFFERENTIAL
FORWARD
WITH
EXCHANGE
COVER
INTEREST
A RBI T R A C E
FOR
GERMAN
COMMERCIAL
B A N KS
f fl d o y H g u r
3-MONTH
TREASURY
EURO-DOLLAR
BlLIS,
DEPOSIT
INTERBANK
LENDING
RATE
AND
RATES
EUIO-DOUH
i Vr-v
RA TE DIFFEREN TIAL
AND
FORWARD
DEUTSCH E MARK
EOIWAIO KATE
RATE
DIFFERENTIAL
WITH
NIT INCENTIVE:
FORWARD
EXCHANGE
COVER
J _
!
.
1, ,
IN F A V O R O f F R A N K f U S T { + )
L
INTERBANK LOAN BATE
TREASURY Bills'
1960
Note:
1961
Speciol forword role ovoiloble to Germort commercial bonki
1962
Chart 4
INTEREST
f~3-MONTH
ARBITRAGE,
TREASURY
I !N7ERBANK
LENDING
FRANKFURT /
SILLS
L O N D O N
AND
RATES
^ g f A S U j ^ l l t t S j
\
A
J
GERMAN INTERBANK K
i l i f t A N TBEASURY
A
BILLS
RATE D I F F E R E N T I A L A N D
j
- 3-MONTH FORWARD STERLING
GERMAN TREASURY B I U S
. SPREAC J H ?AV0R 0? UNITED KINGDOM B i l l
I ^
GERMAN INTERBANK
F O R W A R D RATE
RATE
DIFFERENTIAL
WITH
FORWARD
EXCHANGE
NET INCENTIVE OF UNITED KINGDOM OVER!
GERMAN TREASURY B l i l S
v—r
v
COVER
SHORT-TERM
INTEREST
RATES ~
7
-V,
/ \
CANADA
/
Jopon (3 month mierbonk deposil
(3-month deposit role) y
LONG-TERM
BOND
YIELDS
—r^—r\S
INDUSTRIAL STOCK
INDICES
SPOT
EXCHANGE
RATES
-
MAJOR
CURRENCIES
AGAINST
U.S.
DOLLAR
GERMAN
^
MARK!
Above
s
\iH
pof
3-MONTH
FORWARD
A G A I N ST U . S .
1
DOLLARS
1
GERMAN MARK
PREMIUM +j
:
i
EXCHANGE RATES
W
y
SWISS FRANV''N-'ZXz
+
1
1
UHO
PO
DISCOUNTi
[AGAINST
1
1
POUND
1
1
\
1
STERLING
SifERL N G
1
1
±
1
1
1
1
1
- LONDON
- LONDON
FRENCH FRANC /»
JL
STERLING
UVC
y V 3 ^ N S f >OLJND
i t
I
1
1
1
1
1
1
1
1
@FedFRASER