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DIVISION O F I N T E R N A T I O N A L F I N A N C E
BOARD O F OOVERNORS
OF THE
F E D E R A L R E S E R V E SYSTEM
H. 13
No f 170
!
i
\
i
November 4 , 1964.
,;'v 1 '
I.
CAPITAL MARKET DEVELOPMENTS ABROAD
i
:I. Japan
I I . Nine C h a r t s on F i n a n c i a l Markets Abroad
I I I . L a t e s t F i g u r e s P l o t t e d i n H. 13 Chart S e r i e s
.... ,
'
Japan.
'*
Money and C a p i t a l Markets i n September-October
Because of t h e upward d r i f t of l o n g - t e r m i n t e r e s t r a t e s i n European
f i n a n c i a l c e n t e r s , t h e Japanese M i n i s t r y of Finance i s not e x p e c t e d t o approve
f u r t h e r i s s u e s of p r i v a t e c o r p o r a t e d e b e n t u r e s in European markets i n coming
months. As a r e s u l t , b u s i n e s s c i r c l e s i n Japan a r e p r e s s i n g t h e Japanese
a u t h o r i t i e s t o approve new i s s u e placements i n t h e United S t a t e s i n s p i t e of
t h e i n t e r e s t e q u a l i z a t i o n t a x . The d e c i s i o n t o r e s t r i c t t h e access of p r i v a t e
borrowers t o European c a p i t a l markets i s based upon t h e d e s i r e n o t t o overburden t h e s e markets and, t h e r e b y , t h r e a t e n t h e s u c c e s s f u l f l o t a t i o n of Japanese
government and g o v e r n m e n t - g u a r a n t e e d i s s u e s . The t r e n d toward h i g h e r i n t e r e s t
r a t e s in s e v e r a l European c e n t e r s , and t e n d e n c i e s f o r p r i c e s of Japanese i s s u e s
a l r e a d y s o l d i n E u r o p e - - b o t h e a r l i e r f l o t a t i o n s and t h e Komatsu M a n u f a c t u r i n g
s e c u r i t y cZ October 7 - - t o f a l l , have led t h e Japanese a u t h o r i t i e s to a c t t o
reduce European b o r r o w i n g s .
P r e s e n t p l a n s c a l l f o r a t l e a s t t h r e e Japanese i s s u e s ' t o t a l i n g $65
m i l l i o n i n Europe by n e x t A p r i l . Two i s s u e s t o t a l i n g $30 m i l l i o n were i s s u e d
i n Europe in October.
Japanese s h o r t - t e r m borrowing i n t h e U.S. i n c r e a s e d $55 m i l l i o n in
August, more than o f f s e t t i n g the $33 m i l l i o n d e c l i n e i n J u l y . Long-term
borrowing c o n t i n u e d t o r i s e m o d e r a t e l y by $4 m i l l i o n each in J u l y and August.
(See Table 1 ) .
Table 1.
Japan:
S h o r t - and Long-term Borrowings i n t h e U.S,
( i n m i l l i o n s of U.S. d o l l a r s )
1960 1961 1962 1963
I
Short-term claims!/
Long-term claims J-J
Total
Securities 3/
212
_50
431
175
482
722
3
485
5
727
262
606
30
58
141
200
Change d u r i n g • period'
1963
1964
II III
IV
I . I I June Jul. y
.11
_2
13
121
35
156
li
64
_84
18 2 8 1
32 106
50 387
_60 __5
290
69
11
84
0
_0
229
61
48
_2
50
_0
Aug.
- 5 3 ^ / 55^/
4 _ 4 f /
-49a/ 5 9 a /
0 ^ _ 0
Total
515 785 403 806
110 392
240
290
50 „4^a/ 5 9 a /
84
If
B a n k - r e p o r t e d l i a b i l i t i e s t o t h e U.S.
2 j New s e c u r i t y f l o t a t i o n s .
a/ P r e l i m i n a r y .
NOTE: Data on s h o r t - and l o n g - t e r m c l a i m s s i h c e e a r l y 1962 have r e c e n t l y been r e v i s e d
s u b s t a n t i a l l y by t h e U.S. T r e a s u r y .
0 F F I C I A 1 SSE 0NLY
( D e c o n t r o l l e d a f t e r 6 months)
OFFICIAL USE ONLY
On October 21, t h e M i n i s t r y of F i n a n c e f o r m a l l y r e l e a s e d s p e c i f i c d a t a
on J a p a n e s e commercial b a n k s ' s h o r t - t e r m f o r e i g n l i a b i l i t i e s and a s s e t s as of
•June 30, 1964. With n e t a s s e t s of $ 2 , 1 9 1 m i l l i o n and t o t a l l i a b i l i t i e s of
$ 3 , 2 1 3 m i l l i o n (of which $578 m i l l i o n r e p r e s e n t e d f o r e i g n l i a b i l i t i e s denominated
i n d o m e s t i c c u r r e n c i e s ) , t h e banks 1 had a n e t l i a b i l i t y p o s i t i o n of $ 1 , 0 2 2 m i l l i o n .
I n t e r n a t i o n a l r e s e r v e s f e l l $33 m i l l i o n i n October t o a l e v e l of $1,906
million.
In p a r t , t h e d e c l i n e r e f l e c t s a $20 m i l l i o n repayment made l a t e i n
October a g a i n s t an e a r l i e r f o r e i g n c u r r e n c y swap drawing from t h e F e d e r a l
R e s e r v e . This was i n d i c a t e d i n a s t a t e m e n t made by Governor Yamagiwa of t h e
Bank of Japan i n a r e c e n t p r e s s c o n f e r e n c e . The Governor a l s o s t a t e d t h a t Japan
;v:u1d r e p a y an a d d i t i o n a l $30 m i l l i o n i n November a g a i n s t t h e swap d r a w i n g , T h i s
w i l l f u l l y l i q u i d a t e t h e $80 m i l l i o n drawing made e a r l i e r i n t h e y e a r s i n c e $30
m i l l i o n was r e p a i d i n S e p t e m b e r .
Gold and f o r e i g n , exchange h o l d i n g s a t t h e end of O c t o b e r were a t t h e
l o w e s t l e v e l s i n c e r e s e r v e s r e a c h e d a peak one y e a r e a r l i e r .
The s e a s o n a l l y
a d j u s t e d t r a d e d e f i c i t widened i n September after
a s u b s t a n t i a l narrowing in
J u l y and A u g u s t . The improved t r a d e p e r f o r m a n c e a c c o u n t e d f o r a s u r p l u s i n t h e
b a l a n c e of payments ( a s measured on an exchange t r a n s a c t i o n s b a s i s ) i n August
and September, t h e f i r s t s u r p l u s s i n c e December 1962,
On October 9 , J a p a n e s e f o r e i g n exchange banks were a l l o w e d by t h e
M i n i s t r y of F i n a n c e t o r a i s e t h e maximum i n t e r e s t r a t e p a y a b l e on E u r o - d o l l a r
d e p o s i t s . The r a t e f o r t h r e e - m o n t h d e p o s i t s was i n c r e a s e d f r o m 4 - 1 / 2 t o 4 - 3 / 4
p e r c e n t and t h a t f o r s i x - m o n t h d e p o s i t s was i n c r e a s e d " f r o m 4 - 3 / 4 t o 4 - 7 / 8 p e r
c e n t . The e a r l i e r r a t e s were a b o u t 5 / 1 6 ! s p e r c e n t a g e p o i n t s above t h e London
rate for Euro-dollars.
On t h e d o m e s t i c s i d e , t h e money m a r k e t e a s e d in O c t o b e r and c a l l l o a n
r a t e s d e c l i n e d m o d e r a t e l y . The g e n e r a l l e v e l of i n t e r e s t r a t e s , h o w e v e r , cont i n u e d t o move up t h r o u g h J u l y ,
Bank c r e d i t r o s e l e s s r a p i d l y i n August t h a n a
y e a r e a r l i e r and d o m e s t i c bond i s s u e s r o s e s l i g h t l y i n A u g u s t . The s t o c k m a r k e t
c o n t i n u e d t o r e m a i n d e p r e s s e d and on November 2 was n e a r t h e p r e v i o u s low f o r
t h e y e a r r e a c h e d on A p r i l 9 ,
Money m a r k e t . The money m a r k e t e a s e d s l i g h t l y i n e a r l y O c t o b e r as
b u s i n e s s demands f o r f u n d s s l a c k e d o f f a f t e r September 30, t h e h a l f - w a y p o i n t ,
or t h e end of t h e f i s c a l y e a r , f o r most J a p a n e s e f i r m s . A somewhat e a s i e r t r e n d
:n October was a l s o e n c o u r a g e d by n e t T r e a s u r y payments of ¥100 b i l l i o n , which
more t h a n exceeded t h e c o n t r a c t i o n a r y impact from a ¥9 b i l l i o n r i s e i n bank n o t e s
i n c i r c u l a t i o n and a n e t d e c l i n e of ¥84 b i l l i o n i n Bank of Japan c r e d i t .
Interest rates.
C a l l l o a n r a t e s e a s e d on October 1 a f t e r r e m a i n i n g a t
r e l a t i v e l y h i g h l e v e l s s i n c e e a r l y August (S^e. T a b l e 2 ) . The r a t e f o r u n c o n d i t i o n a l money f e l l from 11.32 p e r c e n t on September 30 t o 10.95 p e r c e n t on
O c t o b e r 1 and r e m a i n e d t h e r e t h r o u g h O c t o b e r 24. The r a t e s f o r o v e r n i g h t and
o v e r - m o n t h - e n d money showed a s i m i l a r d r o p ,
O F F I C I I ! USE ONLY
OFFICIAL USE OLTY
Table 2.
Japan,
A v e r a g e C a l l Loan Money R a t e s i n Tokyo
( i n p e r c e n t p e r annum)
Overnight!/
10,585
10,950
10.950
10.950
10,950
Unconditional^/
10,950
11,315
11,315
11.315
11 315
Over-month-endj/
12 .775
13.140
13.140
13.140
' 13.140
August
1
8
15
22
29
Sept.
, 5
12
19
26
30
10.950
10.950
10,950
10.950
10.950
11=315
11-315
11,315
11 315
11,315
13.140
.13,140
13.140
13.140
13,140
1
10
17
24
10 585
10.585
10.585
10.585
10.950
10.950
10,9.50
10.950
12.775
12.775
12 775
12.775
1/
2/
3/
F o r s e t t l e m e n t on f o l l o w i n g d a y .
Repayable a t a d a y ' s n o t i c e .
Repayable a t a d a y ' s n o t i c e i n t h e f o l l o w i n g month.
The a v e r a g e m o n t h l y i n t e r e s t r a t e on b a n k l o a n s and d i s c o u n t s r o s e
f u r t h e r in July to 7.99 per cent
The r a t e h a s b e e n moving up s i n c e - F e b r u a r y
i n r e s p o n s e t o t h e a d m i n i s t r a t i o n ' s t i g h t money p o l i c y .
Table 3.
Japan-
March
June
September
"December
1/
A v e r a g e M o n t h l y I n t e r e s t R a t e on Bank Loans and D i s c o u n t s
( i n p e r c e n t p e r annum)
1959
1960
1961
1962
1963
1964
8.18
8.28
8.06
8.11
8.21
8.22
8.14
8.08
7.92
7.88
8.00
8.20
8.22
8.23
8,24
8,09
7.92
7,75
7.68
7.67
7.73
7.98
7.99!A
July.
Bank l o a n s and d i s c o u n t s .
Continuing the general trend since the
f i r s t of t h e y e a r , bank c r e d i t r o s e l e s s r a p i d l y i n A u g u s t t h a n t h e y e a r e a r l i e r
T o t a l b a n k c r e d i t i n c r e a s e s ! 0 . 9 p e r c e n t i n A u g u s t i n c o n t r a s t t o a r i s e of 1 . 1
per cent a year e a r l i e r ,
Doans and b i l l s d i s c o u n t e d r o s e 1
and 1 . 3 p e r c e n t ,
r e s p e c t i v e l y , i n A u g u s t , w h i l e h o l d i n g s of s e c u r i t i e s d e c l i n e d 0 . 4 p e r c e n t .
Bank d e p o s i t s i n c r e a s e d 0 . 6 p e r c e n t i n A u g u s t , s l i g h t l y l e s s t h a n t h e 0 . 8 p e r
cent r i s e a year e a r l i e r .
OFFICIAL USE ONLY
OFFICIAL USE ONLY
-4-
The p r o p o r t i o n of b a n k l d a n s and d i s c o u n t s e x t e n d e d f o r p u r c h a s e s of
e q u i p m e n t r e m a i n e d u n c h a n g e d a t 1 7 . 2 p e r c e n t i n A u g u s t , t h e same l e v e l a s i n
May-July.
T h i s l e v e l c o n t r a s t s w i t h t h e c y c l i c a l low o f 1 6 . 3 p e r c e n t i n March
of 1 9 6 3
/
The Bank of J a p a n i n c r e a s e d i t s l e a n s t o c o m m e r c i a l b a n k s r and o t h e r
f i n a n c i a l i n s t i t u t i o n s in September.
T h i s was more t h a n o f f s e t by l a r g e n e t
s a l e s of s e c u r i t i e s by t h e Bank.
(See Table 4)
Table 4.
Japan.
Changes i n Bank of J a p a n L o a n s and H o l d i n g s of S e c u r i t i e s
: " l l l i c r - 5 of y c r )
(1)
(2)
+
(3)
N e t i n c r e a s e (+)
or d e c r e a s e ( - )
Period
1963
I
II
III
IV
Quarter
Quarter
Quarter
Quarter
+158.2
-109 2
4-202.4
4-18.0
1964
I Quarter
I I Quarter
I I I Quarter
+203,3
- 75.7
July
August
September
4-106.1
+ 75.6
+114,3
-83.8
(2)
Loans:
i n c r e a s e (+)
or decrease ( - )
(3)
N e t p u r c h a s e s (+) o.
s a l e s ( - ) of s e c u r i t i e s j
+ 59.1
-198 7
+ 91.3
- 81.2
+ 99.1
+ 89.2
4-129.1
+ 99.2
+ 36,7
+121.0
+ 97 r)
+166.6
-196.7
+ 8.6
+ 16.1
+ 55 2
+ 26.2
+ 59.5
+ 59.1
-110.0
Bond m a r k e t .
New i s s u e s of b o n d s t o t a l e d ¥ 1 3 3 b i l l i o n i n A u g u s t , up
¥2 b i l l i o n f r o m t h e J u l y l e v e l .
S i n c e A p r i l , t h e g e n e r a l v o l u m e of bond i s s u e s h a s
remained . . r e l a t i v e l y unchanged.
New i s s u e s of b a n k d e b e n t u r e s w e r e ¥87 b i l l i o n i n
A - g u s t , o r ¥6 b i l l i o n h i g h e r t h a n i n J u l y .
New i s s u e s of p u b l i c c o r p o r a t i o n b o n d s
and i n d u s t r i a l d e b e n t u r e s w e r e o f f ¥ 1 and ¥ 3 b i l l i o n i n A u g u s t t o ¥26 ^and ¥19
billion, respectively.
•
-XBond y i e l d s w e r e u n c h a n g e d i n A u g u s t e x c e p t f o r a s l i g h t r i s e i n y i e l d s
on i n d u s t r i a l b o n d s .
Stock marketThe s t o c k m a r k e t r a l l i e d m i l d l y i n t h e f i r s t h a l f of
O c t o b e r , b u t s u b s e q u e n t l y d e c l i n e d d u r i n g t h e r e s t of t h e m o n t h .
On November 2
t h e i n d e x was down 12 p e r c e n t f r o m t h e h i g h f o r t h e y e a r r e a c h e d on J u l y 3.
OFFICIAL USE ONLY
OFFICIAL USE ONLY
-5-
Table 5.
Japan.
August
31
¥1,276
October
September
7
14
21
28
1,286
1,260
1,248
1,210
5
12
19
26
¥1,207
1,222
1,210
1,208
November
2
1,208
Dow J o n e s Average of 225 S t o c k s , F i r s t S e c t i o n of Tokyo Exchange
1963
High
Low
¥1,634
¥1,201
1964
High
Low
¥1,369
¥1,203
The t o t a l p r o c e e d s f r o m i s s u e s of s t o c k s i n J u l y t o t a l e d ¥&9 b i l l i o n ,
s l i g h t l y lower t h a n t h e ¥72 b i l l i o n i s s u e d a y e a r e a r l i e r .
I n g e n e r a l , however,
t h e volume of i s s u e s of new s h a r e s h a s been h i g h e r t h i s y e a r t h a n l a s t , w i t h t h e
v a l u e f o r t h e J a n u a r y - J u l y p e r i o d t h i s y e a r t o t a l i n g ¥454 b i l l i o n compared t o ¥294
b i l l i o n d u r i n g t h e same p e r i o d l a s t y e a r ,
I n e a r l y O c t o b e r , J a p a n ' s 13 c i t y banks d e c i d e d t o i n c r e a s e t h e c a p i t a l
of t h e J a p a n J o i n t S e c u r i t i e s Company from ¥15 b i l l i o n t o ¥30 b i l l i o n by November 4 ,
1964. The J . J . S . C , was c r e a t e d l a s t J a n u a r y f o r t h e p u r p o s e of s u p p o r t i n g t h e s t o c k
m a r k e t t h r o u g h b u y i n g o p e r a t i o n s . The t o t a l volume of o p e r a t i n g f u n d s i s a l s o t o
be b o o s t e d t o ¥70 b i l l i o n , w i t h t h e new f u n d s b e i n g u s e d t o make d i r e c t p u r c h a s e s
of s t o c k from t h e f o u r ' l a r g e s t s e c u r i t i e s companies and v a r i o u s i n v e s t m e n t t r u s t s .
F o r e i g n t r a d e . A f t e r n a r r o w i n g s h a r p l y i n J u l y and A u g u s t , t h e s e a s o n a l l y
a d j u s t e d t r a d e d e f i c i t widened s u b s t a n t i a l l y i n S e p t e m b e r . Although e x p o r t s r o s e
2 p e r c e n t , i m p o r t s i n c r e a s e d 8 p e r c e n t , p r o d u c i n g a d e f i c i t of $94 m i l l i o n i n
September i n c o n t r a s t t o an a v e r a g e d e f i c i t of $50 m i l l i o n i n J u l y - A u g u s t .
(See
T a b l e 5 ) . The t r a d e f i g u r e s i n T a b l e 6 a r e m o n t h l y , or monthly a v e r a g e s , on a
customs b a s i s , s e a s o n a l l y a d j u s t e d .
Table 6,
1962
III
IV
Japan:
I
S e a s o n a l l y Adjusted Foreign Trade
( i n m i l l i o n s of U.S. d o l l a r s )
1963
II
III
IV
I
II
1964
June J u l y Aug.
Sept.
Imports
Exports
450
428
466
417
492
417
540
441
573
463
644
486
655
482
657
538
656
556
634
587
601
548
650
556
Balance
-22
-49
-75
:99
-110
-158
-183
-119
-100
-47
-53
-94
On O c t o b e r 1 , 1964, J a p a n l i b e r a l i z e d i m p o r t r e s t r i c t i o n on 13 commodit i e s , t h u s r e d u c i n g t h e t o t a l , number of i t e m s tin which r e s t r i c t i o n s a r e m a i n t a i n e d
t o 162. T h i s a c t i o n i n c r e a s e d t h e l i b e r a l i z a t i o n r a t e ( a s c a l c u l a t e d from t h e b a s e
y e a r of 1959) s l i g h t l y from 9 2 . 7 t o 9 2 . 8 p e r c e n t .
F o r e i g n r e s e r v e s and c a p i t a l f l o w s . I n t e r n a t i o n a l r e s e r v e s f e l l $33
m i l l i g n i n O c t o b e r t o a l e v e l of $ 1 , 9 0 6 m i l l i o n . T h i s f o l l o w e d a p e r i o d of r i s i n g
r e s e r v e s ^ i n August and September when t h e l e v e l i n c r e a s e d $12 m i l l i o n i n each month.
R e s e r v e s a r e now a t t h e i r l o w e s t l e v e l s i n c e t h e g e n e r a l d e c l i n e began ...in November
of 1963 and a r e down $196 m i l l i o n from t h e l e v e l a y e a r e a r l i e r .
OFFICIAL USE ONLY
OFFICIAL USE ONLY
-6-
The r a t i o of J a p a n ' s g o l d and f o r e i g n - e x c h a n g e h o l d i n g s t o n o t e i s s u e s by
t h e Bank of J a p a n h a s b e e n t r e n d i n g down i n r e c e n t y e a r s . Measured f r o m 1959
( t h e c o m p o s i t i o n of o f f i c i a l r e s e r v e s was changed i n 1958 and h e n c e i s n o t c o m p a r a b l e
t o l a t e r y e a r s ) , t h e r a t i o r e a c h e d a peak of 5 6 , 9 p e r c e n t a t t h e 'end of 1960, b u t
has g e n e r a l l y d e c l i n e d s i n c e t h e n . Because of a s e a s o n a l e x p a n s i o n i n money
s u p p l y a t t h e end of the y e a r , t h e December 1963 r a t i o h a s g e n e r a l l y b e e n l o w e r
than the e n d - o f - q u a r t e r r a t i o s t h i s year.
I f t h e r a t i o were computed u s i n g money
s u p p l y r a t h e r t h a n n o t e i s s u e , t h e d e c l i n e would be s h a r p e r , s i n c e c u r r e n c y h a s
f a l l e n from 25 p e r c e n t of money s u p p l y a t t h e end -of 1959 t o 21 p e r c e n t a t t h e
end of 1963.
Table 7.
End of P e r i o d
1959
1960
1961
19621963
1964
Japan;
International
Reserves
¥520.9
701.6
599.8
727.9
740.9
718.6
697.3
698.0
Mar.
June
Sept.
R a t e s of R e s e r v e s t o Bank Notes
billion
billion
billion
billion
billion
billion
billion
billion
Reserves/
Bank Notes
Bank Notes
Issued
¥1.029.4
1,234.1
1,480.1
1,745.9
2,057.4
1,774.8
1,860.6
1,836,1
50.6
56.9
40.5
41.7
36 ,0
40-5
37.5
38.0
billion
billion
billion
billion
billion
billion
billion
billion
per
per
per
per
per
per
per
per
cent
cent
cent
cent
cent
cent
cent
cent
For t h e s e c o n d c o n s e c u t i v e month, J a p a n h a d a c u r r e n t a c c o u n t s u r p l u s i n
i t s b a l a n c e of payments ( a s m e a s u r e d on an e x c h a n g e t r a n s a c t i o n s b a s i s ) i n Septemb e r . Net r e c e i p t s on c u r r e n t a c c o u n t t o t a l e d $33 m i l l i o n , which compares w i t h -a
s u r p l u s of $65 m i l l i o n i n A u g u s t , The t r a d e s u r p l u s i n September was $79 m i l l i o n
and n e t payments f o r s e r v i c e s t o t a l e d $46 r . v i i l i o n .
The c a p i t a l a c c o u n t i n August r e g i s t e r e d net. payments of $32 m i l l i o n .
Net l o n g - t e r m c a p i t a l r e c e i p t s were $35 m i l l i o n , b u t n e t s h o r t - t e r m c a p i t a l payments were $57 m i l l j l o n . With an e r r o r s and o m i s s i o n s i t e m of p l u s $11 m i l l i o n ,
t h e o v e r a l l b a l a n c e of payments r e g i s t e r e d a s u r p l u s of $12 m i l l i o n .
According to p r e l i m i n a r y d a t a , Japanese s h o r t - t e r m l i a b i l i t e s to the
U.S. ( a s r e p o r t e d by U.S. b a n k s ) r o s e $55 m i l l i o n i n August t o $ 2 , 4 7 1 m i l l i o n .
(See T a b l e -8). T h i s l e v e l r e p r e s e n t s a new h i g h f o r t h e y e a r and i s $673 m i l l i o n
higher than a year e a r l i e r t
Table 8.
S h o r t - t e r m Claims on Japan. R e p o r t e d by U.S. Banks
( i n m i l l i o n s of U . S . d o l l a r s )
Jan.
1959
1960
1961
1962
1963
1964
Note:
a/
F e b . Mar. Apr- MAY.
June
July
168
175
204
224
260
256
242
362
372
420
456
586
488
497
875
9 5 2 1 , 0 6 9 1,159 1,196 1 , 2 7 2
1,341
1 , 6 0 1 1 , 6 8 5 1 , 7 7 8 1,775 1 , 7 6 2 1 , 7 5 8
1,765
1 , 6 9 7 1 , 6 9 1 : ,751 1 , 8 7 6 1 , 8 9 8 1 , 8 7 2 , 1 , 8 7 7
2,247 2 , 3 4 0 2 , 4 0 0 2 , 3 9 4 2 , 4 2 1 2 , 4 6 9 ^ / 2 , 4 1 6 F /
269
628
1,335
1,767
Sept.
Oct.
262
262
693
660
Nov.
275
Dec.
806
1,711
1,281
1,710
711
1,292
1,662
1,890
1,904
2,017
1,288
324
1 ,528
1 ,740
2 ,171
2,471^/
Data f o r 1962, 1963 and 1964 have been r e v i s e d and i n c l u d e $52 m i l l i o n r e p o r t e d by
banks i n i t i a l l y as of December 31, 1961.
Preliminary>
OFFICIAL USE ONLY
OFFICIAL USE ONLY
-7-
E a r i y i n O c t o b e r J a p a n p l a c e d two i s s u e s t o t a l i n g $30 m i l l i o n i n t h e
European m a r k e t . The f i r s t was a $20 m i l l i o n , 15-.year, 5 - 3 / 4 p e r c e n t bond
i s s u e by t h e J a p a n Development Bank. The bond was p r i c e d a t $98 t o y i e l d 5 . 9 5
p e r c e n t . The second was a $10 m i l l i o n , 2 0 - y e a r , 6 - 1 / 2 p e r c e n t c o n v e r t i b l e
d e b e n t u r e i s s u e by t h e Komatsu M a n u f a c t u r i n g Company, s o l d a t p a r . T h e r e were
no r e p o r t e d J a p a n e s e bond i s s u e s i n Europe i n e i t h e r August or S e p t e m b e r .
European p r i c e q u o t a t i o n s f o r e a r l i e r i s s u e s of p r i v a t e J a p a n e s e
bonds have r e c e n t l y been weak and t h e M i n i s t r y of F i n a n c e h a s r e p o r t e d l y d e c i d e d
to d i s c o u r a g e f o r t h e t i m e b e i n g f u r t h e r i s s u e s of p r i v a t e bonds i n E u r o p e . The
Government, however, w i l l c o n t i n u e t o i s s u e v a r i o u s government and governmentg u a r a n t e e d i s s u e s . Faced w i t h a c l o s i n g - o f f of t h e European m a r k e t , f i n a n c i a l
and i n d u s t r i a l l e a d e r s f r o m t h e p r i v a t e s e c t o r a r e now u r g i n g t h e Government t o
resume bond f l o t a t i o n s i n t h e U n i t e d S t a t e s . They p o i n t o u t t h a t t h e c u r r e n t
b o r r o w i n g r a t e i n t h e U.S. i s s u f f i c i e n t l y low t o p e r m i t t h e payment of an .
a d d i t i o n a l 1 p e r c e n t a g e p o i n t as r e q u i r e d u n d e r t h e i n t e r e s t e q u a l i z a t i o n t a x .
A r e c e n t s i g n i f i c a n t development i n t h e f i e l d of f o r e i g n bank c r e d i t was
t h e e x t e n s i o n by t h e F i r s t N a t i o n a l C i t y Bank i n Tokyo of a $1 m i l l i o n c r e d i t t o
t h e Yokogawa-Hughlett Packard company w i t h o u t t h e g u a r a n t e e of a J a p a n e s e f o r e i g n
exchange 'bank. The J u l y - A u g u s t i s s u e of t h e c a p i t a l m a r k e t s r e p o r t e d a s i m i l a r
.impact l o a n of $500,000 t o t h e Toyo I n k M a n u f a c t u r i n g Company, a l s o w i t h o u t t h e
u s u a l J a p a n e s e bank g u a r a n t e e . O t h e r f o r e i g n banks a r e r e p o r t e d l y c o n s i d e r i n g
f o l l o w i n g s u i t . Domestic J a p a n e s e banks a r e c o n c e r n e d a b o u t t h i s development
s i n c e t h e y w i l l s t a n d t o l o s e t h e f e e of .365 p e r c e n t p e r annum n o r m a l l y c h a r g e d
f o r g u a r a n t e e i n g such l o a n s , as w e l l as t h e f o r e i g n exchange i n v o l v e d . The f o r e i g n
banks i n J a p a n have r e p o r t e d l y been f l o o d e d w i t h a p p l i c a t i o n s f o r s i m i l a r impact
loans.
F o r e i g n e x c h a n g e . The yen t e n d e d t o s t r e n g t h e n i n t h e s p o t m a r k e t d u r i n g
S e p t e m b e r , b u t weakened s l i g h t l y d u r i n g t h e f i r s t h a l f of O c t o b e r . The yen a l s o
a p p r e c i a t e d moderately in the three-month forward market in mid-September, but a l s o
weakened s l i g h t l y d u r i n g t h e f i r s t h a l f of O c t o b e r . S i n c e t h e yen a p p r e c i a t e d a t a
f a s t e r r a t e i n t h e s p o t market t h a n i n t h e f o r w a r d m a r k e t , t h e f o r w a r d d i s c o u n t i n c r e a s e d from .09 p e r c e n t i n e a r l y September t o 1.00 ;per c e n t on O c t o b e r 15.
Table 9.
Japan:
C u s t o m e r ' s T . T , Exchange Rate of B.ank of Tokyo i n Tokyo
Yen-dollar
spot middle
rate
Three-month
forward middle
rate
August
28
"362.35
362.33
September
4
11
18
25
2
9
15
361.90
362.05
36C.80
360.35
360.60
360.25
360.60
362.00
362.10
361.00
361.20
361.20
361.35
361.50
October
1/
- '
^
•
-
.021/
.11
.06
.22
.94
.67
1.22
1.00
Preliminary.
Forward d i s c o u n t
in per cent
. p e r a" r.um,
OFFICIAL, USE ONLY
I
.
INTEREST A R B I T R A G E ,
UNITED
STATES
/
CANADA
Friday figures*
3-MONTH
p,
TREASURY
BILL
RATES
UNITED STATES
RATE
DIFFERENTIAL
AND
FORWARD
CANADIAN
DOLLAR
V./V-
RATE
DIFFERENTIAL
WITH
t Thurtdoy ligurci 1961 1962, Friday 1
FORWARD
EXCHANGE
COVER
INTERNATIONAL
3-MONTH
MONEY
EURO-DOLLAR
MARKET
DEPOSIT
Wedn e sday fig u re s
YIELDS
FOR
U.S.
VS. CERTIFICATE
DOLLAR
OF
INVESTORS!
DEPOSIT;
YIELDS
{EURO-DOLLAR DEPOSIT
DIFFERENTIAL:
U.S.
N E W YORK
Friday figures
OFFER
RATES
ON
EURO-DOLLAR
CERTIFICATE
SELECTED
TREASURY
1 —
COMMERCIAL
Of
3-MONTH
INVESTMENTS
BILLS-iFully H e d g e d !
:—IT
'
FAMIPIU
PAPER-Fully
U.K. HIRE PURCHASE,
1
[CANADIAN FINANCE COMPANY
OV ER
DEPOSIT
U.S. FINANCE COMPANY;
H e d g e d
1
P • r lent par annum)
5ho
'
INTEREST ARBITRAGE FOR
3-MONTH
EURO
TREASURY
DOLLAR
GERMAN
COMMERCIAL B A N K S
BILLS, INTERBANK
DEPOSIT
RATES
LENDING
T
RATE A N D
I
~|
GERMAN TREASURY SILLS
RATE D I F F E R E N T I A L
AND
FORWARD
DEUTSCHE MARK
F O R W A R D RATE D I S C O U N T ( - 1
INTERBANK LOAN RATE
,
T R E A S U R Y ' BILLS
RATE
DIFFERENTIAL
NET I N C E N T I V E :
WITH
H
-
FORWARD
EXCHANGE
IN F A V O R OF F R A N K F U R T ( + )
COVER
"
I N T E R E S T A R B IT R A G E, N E W
Y O R K / LO N O O N
Friday (ig
3 -M O N T H
TREASURY
BILL
RATES
U.K. 1 0 C A I AUTHORITY DEPOSITS
RATE D I F F E R E N T I A L
AND
3-MONTH
FORWARD
STERLING
(
I
RATE
DIFFERENTIAL
WITH
FORWARD
EXCHANGE
COVER
IN F A V O R OF L O N D O N
1965 j
LONG-TERM
BOND
YIELDS
\ r
J — V
-CiL°rt
5
SHORT-TERM
INTEREST
RATES *
EURO-DOLLAR - LONDON
A A
/V^AL,
R V
V
1962
"X* j month ireosuiy bill rules lor oil countries except Jopon
iond S w 11 z e f I ti n d (3 month deposit rote)
-j- 3 month rnie for U 5 dollar deposits in London
(Average role on'bnnk loans and discount!
'
*
Y\
Chert_8
SPOT
EXCHANGE
RATES
- MAJOR
CURRENCIES AGAINST
U.S.
DOLLAR
Bel o w p a r
Abo ve p a i
Below par
-
/
I
r
~")<
\ i
•
-
-
.
a
zr
,
[
- ,B/
H DOLLAR
j
-
-
\
l/V\Jj
A
V
L
Ppr
-
\
-
J A P A N t $ t YEN
1
1
i
i
'
i
i
, I 1
1
1
•
i
i
i
i
;
-U.S._
i
i
i
i
i
ri
i.
*r
;
i
i
- B ^ r
INDUSTRIAL
STOCK
INDICES
• •He ital*
SWITZERLAND
New series
Swiss Bonk Corporolioo ind'istnof slock
Jo pa n. «nde* of 225 industrial ond other
mde*
slocks traded on the Tokyo exchange
3rMONTH
FORWARD
EXCHANGE
RATES
Friday figures
AGATNST
U.S.
DOLLARS
_P,
PREMIUM +
POUND STERLING
AGAINST
AGAINST
POUND
POUND
STERLING
STERLING
—
- LONDON
-
LONDON
FRENCH FRANC-1.
^
H, 1 3
No. 1 7 0
November k» 196U
,
III. Latest Figures Plotted In H.13 Chart Series, 196U
Per cent
per annum
Chart 1
" Upper panel
(Friday, October 30 >
except as noted)
(Wednesday, October 28)
Treasury bills:
•>. Euro-$ deposit
kiS0 .
U.S. certif. of deposit
U.S.
kiii
Germany
M i
Canada
3.6^
U.S.
hSl
U.K.
1M
Swiss 3-month deposits
(Date: pctober 15)
Canada
1M
Euro-$ depbsit (London)
Finance Co. paper:
U.S.
Canada
Hire-purchase paper, U.K.
Japan: composite rate
(Date: June 26
)
kiio
Chart 6
" k.ko
1^0
-urn
,
Bonds:
Chart 2
U.S. govt.
(Wed., October 28
(Friday, October 30)
Canada
U.S.
3.62
M l
Spread favor Canada
+0.09
Forward Canadian dollar
-0.20
Net incentive (Canada +)
-0.11
Chart 3
(Friday, October.30)
Treasury bills:
1
U.K.
(Friday, October 30)
Treasury bil^s:
itSi
h &
Lower panels
Treasury bills:
Per cent
per annum
Chart 5
U.K.
)
u.i8
U.K. war loan
(Thurs., October 22
(Thurso, October 29
German Fed. Railway
(Fri,, October 30
n
Swiss Confederation
(Fri..., October 16
(Fri. j, October 23
Canadian govt.
(Wed., October 28
P J
Netherlands govt ^perpetual
(Fri,, October ll6)
6»Ul
1,08
S.1S
A . 8 ?
M 2
U.S.
Spread favor U.K.
+1.06
Forward pound
-0,82
Net incentive (U.K. +)
+0.2I1
Digitized forFor
FRASER
description and sources
September 23, 1964.
of data see special annex to H. 13 Number 164,
@FedFRASER