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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 ' . I- BOARD O F G O V E R N O R * H. 13 No. 71 September. 2 8 , 1962 CAPITAL MARKET DEVELOPMENTS ABROAD Germany Nine C h a r t s on F i n a n c i a l Markets Abroad I. Germany: Money and Capital Markets in August A s l u g g i s h s t o c k market and a c o n t i n u e d upward t e n d e n c y i n bond y i e l d s c h a r a c t e r i z e d f i n a n c i a l m a r k e t s i n Germany d u r i n g August and e a r l y September, The r e l a t i v e e a s y c o n d i t i o n s i n t h e money market was t h e o u t growth of s u b s t a n t i a l r e p a t r i a t i o n of f u n d s f r o m abroad by German commercial banks• During August d a y - t o - d a y money r a t e s e a s e d downward f r o m a b o u t 2 - 5 / 8 3 - l / l i p e r c e n t i n l a t e J u l y t o a r a n g e of 2 — 2 - 7 / 8 p e r c e n t i n t h e l a s t week i n August when d a y - t o - d a y c r e d i t s u p p l i e s approached a p o i n t of o v e r - l i q u i d i t y . The a p p r o a c h i n g September t a x d a t e d i d n o t c a u s e t h e market t o t i g h t e n a s u s u a l . F u r t h e r r e p a t r i a t i o n of commercial bank f u n d s from a b r o a d , encouraged by a f u r t h e r r i s e i n t h e c o s t of f o r w a r d cover a t t h e Bundesbank f r o m 0 , 5 0 t o 0 , 7 5 p e r c e n t and a r i s e i n t h e T r e a s u r y b i l l r a t e f r o m 2 . 3 8 t o 2 , 5 0 p e r c e n t a t t h e end of J u l y , c o n t r i b u t e d t o t h e a v a i l a b i l i t y of f u n d s i n t h e money m a r k e t . Long-term bond y i e l d s c o n t i n u e d t o r i s e and t h e bond m a r k e t d i s p l a y e d s i g n s of b e i n g s a t u r a t e d . R e c e n t 6 p e r c e n t i s s u e s — i n d u s t r i a l and p u b l i c — a r e b e i n g quoted a s much a s 1 - 1 / 8 p o i n t s under p a r . The August DM 250 m i l l i o n F e d e r a l r a i l w a y s i s s u e was b a r e l y s u b s c r i b e d , and t h e n o n l y with t h e h e l p of l a r g e f o r e i g n p u r c h a s e s . Because of t h e s e c o n d i t i o n s , t h e a u t h o r i t i e s have d e c i d e d t o o f f e r o n l y DM 300 m i l l i o n of t h e second t r a n c h e of t h e F e d e r a l l o a n t o t h e d o m e s t i c m a r k e t ; the o t h e r p l a n n e d DM 100 m i l l i o n w i l l be o f f e r e d g l o b a l l y , probably to i n s t i t u t i o n a l i n v e s t o r s . The German s t o c k m a r k e t remained r a t h e r weak i n A u g u s t . The s t o c k i n d e x moved s l u g g i s h l y w i t h i n a f o u r p o i n t r a n g e ( f r o m 155 t o 159) d u r i n g t h e l a s t two weeks of August and t h e f i r s t two of September. T r a d i n g volume was generally s m a l l and g e n e r a l u n c e r t a i n t y was t h e dominant m a r k e t n o t e . The F e d e r a l budget f o r 1962, approved by P a r l i a m e n t i n May; p r o v i d e s a d e f i c i t , on an economic b a s i s , of a b o u t DM"1.3 b i l l i o n compared w i t h a s u r p l u s of DM 0 . 8 b i l l i o n f o r 1 9 6 1 . A f t e r p r o l o n g e d d i s c u s s i o n , The Laender a g r e e d t o c o n t r i b u t e a g r a n t of DM 1 . 0 5 b i l l i o n t o t h e F e d e r a l T r e a s u r y . German commercial banks h e l d DM 3 , 0 6 1 m i l l i o n or 55 p e r c e n t of t h e i r t o t a l f o r e i g n money-market a s s e t s i n U.S. d o l l a r s on June 3 0 , a c c o r d i n g t o a s p e c i a l s u r v e y of t h e Bundesbank summarized i n Table 1 , About h a l f t h e s e d o l l a r s were h e l d i n U.S. f i n a n c i a l c e n t e r s and a b o u t h a l f a s U.S. d o l l a r d e p o s i t s i n banks i n o t h e r c e n t e r s . Some DM l , 0 6 l m i l l i o n of U.S. d o l l a r s OFFICIAL USE ONLY DECONTROLLED AFTER SIX MONTHS OFFICIAL USE ONLY - 2 - were h e l d i n European banks w i t h a b o u t 21 p e r c e n t i n B r i t i s h , 9 p e r c e n t i n F r e n c h and 8 p e r c e n t i n I t a l i a n banks * T w o - t h i r d s of U.S. d o l l a r a s s e t s were h e l d a s - time d e p o s i t s . Less t h a n h a l f t h e h o l d i n g s i n U.S. banks were i n t i m e d e p o s i t s b u t over 90 p e r c e n t of U.S. d o l l a r s h e l d a t European banks were i n t i m e d e p o s i t s c o n s t i t u t i n g a m a j o r p a r t of t h e s u p p l y of s o - c a l l e d E u r o - d o l l a r s a v a i l a b l e i n i n t e r n a t i o n a l money m a r k e t s . Table 1 0 S h o r t - t e r m F o r e i g n A s s e t s of German Commercial Banks ( i n m i l l i o n s of D-marks) Foreign deposits: Total F o r e i g n a s s e t s by c u r r e n c y : U.S. d o l l a r D-mark Canadian d o l l a r Pounds Swiss f r a n c s , Other c u r r e n c i e s Total Holdings of U.S. dollars by financial center: United S t a t e s United Kingdom France Italy Belgium Netherlands Canada Switzerland Japan Other T o t a l UeS. d o l l a r s Total Demand Time 3,061 1,9# 75 133 102 219 3,5# 2,297 287 7 101 99 207 2,998 235 117 7 85 39 185 668 2,062 170 l,57L 651 267 238 91 3k 32 27 2h 123 3^51 906 6L9 267 238 91 31 32 13 5 65 2^9? 193 26 0 0 0 0 8 1 . «« 7 235 «DC» 16 60 22 2,330 713 623 267 238 91 31 2U 12 5 58 2,062 Moneymarket paper a / 660 ~ 385 66 Shortterm credits 10U 1,273 2 <=«• 1 0 1,112 —— 2 U8 OT- #8 10 2 eac* —— — CO — 2 —555 0 3 0 Ik 19 56 10U a / I n c l u d e s DM 611 m i l l i o n of U.S. T r e a s u r y b i l l s h e l d b y t h e R e c o n s t r u c t i o n Loan C o r p o r a t i o n . Money m a r k e t . The money market was r e l a t i v e l y e a s y t h r o u g h o u t A u g u s t . (See Charts3&M Banks r e p a t r i a t e d f u n d s f r o m abroad d u r i n g t h e f i r s t two weeks of t h e month d e s p i t e an e a s y money m a r k e t ? a p p a r e n t l y because t h e c o s t of f o r w a r d cover was i n c r e a s e d . (See. Table6.) A t e m p o r a r y t i g h t e n i n g of t h e market i n t h e t h i r d week of August a r o s e f r o m t h e b a n k s ' m i s c a l c u l a t i o n of t h e l i q u i d i t y e f f e c t s of tiie r e p a t r i a t i o n b u t a t t h e end of t h e month t h e r e was o v e r - l i q u i d i t y o n " t h e s h o r t - t e r m money m a r k e t | d a y - t o - d a y money was a l m o s t e x c l u s i v e l y o f f e r e d and n o t demanded and r a t e s f e l l t o a 2 t o 2 - 7 / 8 p e r c e n t r a n g e . (See Table 2 . ) Longer t e r m money^remained u n a f f e c t e d by t h e s e e v e n t s . OFFICIAL USE ONLY OFFICIAL USE ONLY Table 2 . - 3 - Money Market Rates i n F r a n k f u r t , J u l y and August ( i n p e r c e n t p e r annum) Day-to-day money July 2-6 9-13 16-20 23-27 August 1 - 7 8-15 16-23 2U-31 3 - 3-1A 2-3/U - 3 2-3/U - 3 2 - ^ / 8 - 3-lA 2-5/8 - 3 2-3/8 - 2-5/8 2-3/8 - 3 2 - 2-7/8 . Three-month l o a n s n.a. ™ 3-3/8 3-lA 3-lA 3~lA - 3 - 3 / 8 3-3/8 3 - 1 / 8 - 3-lA 3-3/8 3 - 3 / 8 - 3-lA The money market was f i r m e r d u r i n g the f i r s t half of September because of p r e p a r a t i o n s f a r t h e coming t a x d a t e . S u b s t a n t i a l amounts a r e s t i l l being r e p a t r i a t e d from abroad but the banks appeared t o have added t o t h e i r a s s e t s with t h e Bundesbank r a t h e r t h a n o f f e r i n g t h e i r incoming f u n d s t o the money market. Bond marks to T o t a l placement of bonds i n J u l y reached a r e c o r d DM 1 . 7 b i l l i o n * (See Table 3«) This heavy placement was, however, t o o much f a r t h e market t o bear without s t r a i n . The bond market was v e r y weak and v e r y q u i e t throughout August. (See Chart 6 . ) Recent 6 p e r c e n t government i s s u e s were t o be had 3/8 t o 1/2 below p a r and i n d u s t r i a l i s s u e s a s much a s 1 - 1 / 8 below p a r . The August 6 p e r c e n t DM 250 m i l l i o n F e d e r a l r a i l w a y s i s s u e was b a r e l y s u b s c r i b e d , and t h e n only w i t h t h e h e l p of l a r g e f o r e i g n p u r c h a s e s , whereas a l l F e d e r a l loans i s s u e d p r e v i o u s l y t h i s y e a r had been immediately o v e r s u b s c r i b e d . Bond p r i c e s s l i p p e d downward through August and appear t o have h e l d t h e i r l e v e l a t the end of t h e month, a t l e a s t i n p a r t because no new i s s u e s a p p e a r e d . Even a t t h e low market l e v e l s , t h e r e e x i s t e d l i t t l e demand f o r s e c u r i t i e s . Bond y i e l d s continued t o preep upward; t h e y i e l d on t h e 1958-83 5 - 1 / 2 p e r cent r a i l w a y i s s u e r o s e by 11 b a s i s p o i n t s from t h e beginning of August t o t h e l i i t h of September. The t i g h t e n i n g of the German c r e d i t market i n g e n e r a l i s a t t r i b u t e d i n p a r t t o the f a c t t h a t 72 p e r c e n t of t h e long-term f u n d s of t h e banks a r e now held i n long-term investments and the banks have a c c o r d i n g l y reduced t h e i r purchases of new i s s u e s . A 21 m i l l i o n DM 6 p e r cent i n d u s t r i a l l o a n i s s u e d a t 9 9 - 3 A was immediately oversubscribed on September 1 0 t h . S t a n d a r d - E l e c t r i c - L o r e n z , A.G. and the S t a t e Public Mortgage Bank a r e expected t o approach t h e market with s i z e a b l e i s s u e s i n September and t h e second t r a n c h e of the F e d e r a l loan i s expected the f i r s t week i n October. DM 100 m i l l i o n of t h i s t r a n c h e w i l l p r o b a b l y be o f f e r e d g l o b a l l y t o i n s t i t u t i o n a l i n v e s t o r s and DM 300 m i l l i o n t o t h e German c a p i t a l market. OFFICIAL USE ONLY _ OFFICIAL USE ONLY k•- - Table 3 . Gross Placements i n German S e c u r i t y Markets ( i n m i l l i o n s of DM, monthly or monthly average) 1961 II III IV I II 1962 Majr June July 39 UUl 16 78 50 79 72 136 139 130 78 20 258 638 — —— 112 31L 32 -§9 132 217 109 157 213 . 517 3U0 486 207 1,253 Mortgage and communal bonds 526 T o t a l gross bond placements W 1,107 525 U6U 503 73S to% 715 665 1,212 U53 793 U85 971 6U0 hhO 1,693 W Gross share placements 263 352 130 •185 205 322 6U 312 1,1*61 999 957 8U6 1,397 998 1}293 711 2,005 I "Occasional" borrowers' bonds % Industrial Public a u t h o r i t y Foreign i s s u e r s Other bonds a / 101 117 Total occasional borrowers' bonds: 281 211 T o t a l s e c u r i t y placements a t issue value 35k —— 8U k —— Jh lhl —— —— —— —— a / Mostly.bonds of s p e c i a l i z e d c r e d i t i n s t i t u t i o n s , e s p e c i a l l y i n 1961. b / Includes medium-term n o t e s ( K a s s e n o b l i g a t i o n e n ) . Stock market. The German stock market remained weak but f a i r l y calm i n August. (See C h a r t 7 . ) A f t e r a f u r t h e r drop of 6 per cent from 151 t o jUt2 i n t h e F r a n k f u r t e r Allgemeine a l l - s h a r e s index during t h e f i r s t 7 days of August, t h e stock market recovered i t s e l f a s t h e FAZ index r o s e 13 p e r c e n t t o 163 between August 7th and 16th thanks p a r t l y t o renewed f o r e i g n investmento I n t h e l a s t p a r t of t h e month, t h e market d r i f t e d downward again on a low t u r n o v e r and f l u c t u a t e d u n e a s i l y under b e a r i s h p r e s s u r e from Berlino Continued u n e a s i n e s s and reduced a c t i v i t y have c h a r a c t e r i z e d t h e market through t h e f i r s t h a l f of September; t h e share index remained unchanged a t 155 from September 6th t o 1 7 t h , Foreign t r a d e » I n June, t h e German t r a d e s u r p l u s continued t o d e c l i n e as exports f e l l by $U0 m i l l i o n or h p e r c e n t t o $1,070 m i l l i o n on a s e a s o n a l l y - a d j u s t e d b a s i s and imports i n c r e a s e d by only $5 m i l l i o n t o $1,053 m i l l i o n . (See Table U.) The r e s u l t i n g t r a d e s u r p l u s f o r June was $17 m i l l i o n . Both import and export t r a d e continued t o expand i n t h e second q u a r t e r of 1962. The second q u a r t e r i n c r e a s e i n imports of 10 per c e n t over t h e same q u a r t e r of 1961 was due p r i n c i p a l l y t o n e c e s s a r y and u n u s u a l l y l a r g e imports of a g r i c u l t u r a l p r o d u c t s as a r e s u l t of the poor h a r v e s t i n 1961. This compares with a r i s e i n imports of lit p e r c e n t between t h e f i r s t q u a r t e r s of 1961 apd 1962. The t r a d e s u r p l u s e s i n t h e f i r s t and second quarters i n 1962 were only about one h a l f as l a r g e as they were i n the corresponding q u a r t e r s of 1961. OFFICIAL USE ONLY - 5 - OFFICIAL USE ONLY Table U. German Foreign Trade ( s e a s o n a l l y a d j u s t e d , monthly or monthly averages i n m i l l i o n s of U.S. d o l l a r s ) Calendar Year I960 1961 Exports Imports Surplus 951 81*8 I03 10$2 917 H F 1961 I II 10li7 852 "19F 1077 936 H I III 1060 911 H I - 1962 II 17 I 1058 960 -9% 1103 99k 109 1115 101*3 72 June 1110 101*8 1070 1053 ~T7 The German Bundesbank announced t h a t b i l l s of German e x p o r t e r s arfc now being admitted as f i r s t c l a s s bank acceptances by P r i v a t diskontbank, A.G., t h u s reducing t h e c o s t of s h o r t - t e r m export f i n a n c i n g . The P r i v a t d i s k o n t b a n k was e s t a b l i s h e d two y e a r s ago t o r e d i s c o u n t b i l l s of exchange f o r i m p o r t e r s and those drawn f o r t r a n s i t d e a l i n g s . This a c t i o n would seem t o h e r a l d a new era of a c t i v e encouragement of e x p o r t s by German o f f i c i a l policy. Foreign exchange r e s e r v e s 0 Commercial bank holdings of f o r e i g n exchange i n c r e a s e d m i l l i o n i n J u l y . Gross gold and f o r e i g n exchange r e s e r v e s of t h e Bundesbank d e c l i n e d $19 m i l l i o n i n J u l y even though t h e United Kingdom r e p a i d $65 m i l l i o n of i t s e a r l i e r DM drawing w i t h t h e IMF. The t o t a l r e s e r v e gain f o r J u l y was t h e r e f o r e $25 m i l l i o n . I n August commercial banks reduced t h e i r swap engagements by $62 m i l l i o n n e t and r e p a t r i a t e d c o n s i d e r a b l e f u n d s from abroad i n response t o a h i k e of l / k p e r c e n t i n swap c o s t s and i n p r e p a r a t i o n f o r t h e September t a x d a t e . An i n c r e a s e of only $20 m i l l i o n i n t o t a l o f f i c i a l r e s e r v e s i n d i c a t e s t h a t German combined r e s e r v e s f e l l a p p r e c i a b l y i n August. Table 5« German Foreign Exchange Reserves ( i n m i l l i o n s of U.S. d o l l a r s ) I Bundesbank Comm. banks a / Total +300 +U79 +799 1961 II -282 +U0U b/+l22 III IV I 11 1962 June ^L August -570 - 71; -6IU1 + 68 -1*27 -3^9 -U63; +601 +I3F >1*8 -89 -K) +15U -255 -101 -19 +W* +2F +20 n.a. a / Balances with f o r e i g n banks and money market investments abroad. " b / A f t e r s p e c i a l debt prepayments of $776 m i l l i o n t o t h e United S t a t e s anc[ t h e United Kingdom. The t o t a l would be a r e s e r v e g a i n of $898 m i l l i o n , i f adjusted for these transactions. OFFICIAL USE ONLY I OFFICIAL USE ONLY ~ 6 - In i t s l a t e s t monthly Report t h e Bundesbank r e l e a s e d i n f o r m a t i o n about the f o r e i g n s h o r t - t e r m investments of the commercial banks, The Bundesbank a c t i o n a t t h e end of 1958 t o provide f a c i l i t i e s f o r forward exchange cover encouraged the commercial banks to move f u n d s abroad from 1958 u n t i l t h i s yearo By February 1962 t h e i r s h o r t - t e r m f o r e i g n investment t o t a l e d DM 7„3 b i l l i o n o A summary of t h e s e h o l d i n g s on June 30 5 1962 i s shown i n Table 1 of t h i s report«, During the f i r s t half of 1962 5 t h e Bundesbank has r a i s e d t h e c o s t of forward cover and i n c r e a s e d t h e i n t e r e s t r a t e s on the domestic money m a r k e t . These a c t i o n s l e d the banks t o reduce t h e i r s h o r t - t e r m f o r e i g n investments t o DM 5=5 b i l l i o n . b y the end of June 1962, Since then s h o r t - t e r m investments have f u r t h e r d e c l i n e d t o an e s t i m a t e d DM U b i l l i o n and t h e r e t u r n flow of money i n t o Germany has a c c e l e r a t e d s i n c e t h e beginning of August 0 Foreign exchange r a t e * A f t e r s t r e n g t h e n i n g s l i g h t l y during t h e f i r s t e i g h t days of August 9 t h e D-mark continued t o weaken g r a d u a l l y a g a i n s t t h e d o l l a r during t h e r e s t of the month„ (See Chart 8 0 ) On August 31 the exchange r a t e s l i p p e d to 2^,996 c e n t s and remained below p a r through September 5 t h e f i r s t time t h i s y e a r t h a t the DM exchange r a t e has dipped below par f o r more t h a n a d a y , B e r l i n t e n s i o n was t h e dominant' market f a c t o r a t t h i s time* The forward premium on the DM decreased from 1„0 p e r c e n t per annum i n t h e — f i r s t week of August to 0 , 7 p e r c e n t where i t s t a b i l i z e d a t t h e end of t h e month Foreign a i d developments 0 F e d e r a l M i n i s t e r f o r Economic Cooperation, Walter Schelly r e c e n t l y summarized f u t u r e German economic aid p o l i c y i n two — p u b l i c s t a t e m e n t s . Aid commitments w i l l be made i n t h e f u t u r e only f o r s p e c i f i c p r o j e c t s ; a i d w i l l be " t i e d , " The major burden of economic development a i d w i l l be born by p r i v a t e i n d u s t r y and i n v e s t o r s . To t h i s end 9 new government guarantees f o r the covering of c a p i t a l investments i n developing c o u n t r i e s a g a i n s t p o l i t i c a l r i s k s have been announced» The main change i n comparison with the e x i s t i n g arrangement i s a r e d u c t i o n of the p r o p o r t i o n of t h e r i s k borne by the i n v e s t o r from 20 t o 10 per c e n t . This r e s i d u a l p o r t i o n must not be covered elsewhere. The governments l i a b i l i t y i s r e s t r i c t e d t c a maximum amount determined by t h e i n i t i a l value of t h e investment,, which i s reduced by a f i x e d sum each year* p l u s income e q u a l t o a t most 2k p e r c e n t of the c a p i t a l v a l u e . The charge f o r t h e g u a r a n t e e was f o r m e r l y 3/U t o 1=1/2 p e r c e n t a year but has now been reduced t o 0 , 6 t o 1 p e r cent of t h e value covered 0 The German Development- Corporation was e s t a b l i s h e d o f f i c i a l l y on September l l i t h and w i l l begin o p e r a t i o n s immediately. I t w i l l promote s m a l l and medium-sised e n t e r p r i s e s a b r o a d . Momentarily t h e F e d e r a l Government i s the only member of the c o r p o r a t i o n b u t t h e r e w i l l be f u t u r e o p p o r t u n i t y f o r o t h e r p u b l i c and p r i v a t e i n t e r e s t s t o p a r t i c i p a t e = European and B r i t i s h Commonwealth S e c t i o n , II, Nine Charts on F i n a n c i a l Markets Abroad OFFICIAL USE ONLY - 7 Table 6 0 Germanys S e l e c t e d Money Market Yields and Exchange Rates (per cent p e r annum) ~~~ . 3-mo. Eurodollar deposits London 196l-Oct. 6 Nov. 10 Dec» 22 1962—Jan. Febo Mar, Apr. May June July Avg. 5 16 30 27 25 27 3 10 17 2k 31 Sept. 7 Ik 3-mo. U.S. $ i n t o Marks Comm. . bankS/ Market 3-mo. i n t e r bank loans Frankfurt Spread in favor London U.oo -0.75 -0.32 +0.13 =0 o 25 -0.25 +0.50 +0.56 +1.06 +0.56 +0.68 n.a. +0.63 '-0.2$ 3.25 3.31 3-88 3.63 3.75 3.00 3.63 3.Wt 3.69 3.50 3.81 3.66 3.9U 3.81 3.78 3.72 3.72 3.81 3.8U 3.91 2.75 2.63 2o9U 3.13 n.a. 3.31 n«a. 3.38 3-19 3.38 3.19 «o.Uo *0.53 40.3L +0.62 *»«* —— U.K. Ger 0 g.s. —0 060 -0.73 =1.30 6.00 5.31 5.28 2.13 2.00 2.00 2.31 2.1t7 2.60 -0.95 —0.62 -0.35 -O.32 -0.35 -0.21 -0.82 -0.95 -0.8U -0.78 -O.63 -0.63 -0.65 -0.69 U.3U 5.W lt.3U U.03 3.6 9 3.78 3.81 3.75 3.69 3.69 3.69 3.6 9 3.66 3.63 1.88 1.88 2.00 2.13 2.13 2.25 2.38 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.7U 2.83 2.75 2.7U 2.69 2.7k 2.88 2.82 2.83 2.83 — -0.50 -0.25 -0.25 .-0.25 -0.25 -0.50 -0.75 -0.75 -0.75 -0.75 -0.75 =0.75 -0.75 3e4no. T r e a s . b i l l s "~aj~ Bundesbank s p e c i a l r a t e f a r £ t o 6 month deposits® ~ " Germany: S e l e c t e d Loan* Deposit and S e c u r i t y Rates ~ (per cent p e r annum) Comm. bank / loans- 6-12 mo. d e p o s i t s Savings Time , Bond y i e l d s Public 5-1/2^ Railway a u t h o r . 1958-83 i t i e s Share yields Yield gap 1959-Maroh Dec. 7.25 8.50 3.25 3.25 2.50 3.25 5.U 5.9 5.6 6.2 3.22 2.19 2 oh U.o 1960-March Dec. 8.50 8.50 3.75 U.50 3.25 3.50 6.3 5.9 6.U 6.2 2.27 1.96 U.l U.2 1961-March Dec. 8.00 7.50 U.25 3.50 3.25 2.75 5.8 6.0 5.9 6.0 2.11 2.U9 3.7 3.5 1962-Jan. Feb. Mar. Apr. May June July Aug. 7.50 7.50 7.50 7.50 7.50 7.50 7.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 2.75 2.75 2.75 2.75 2.75 2.75 2.75 5.8 5.7 5.6 6.6 5.7. 5.8 5.8 5.8 5.9 5.7 5.6 5.6 5.8 5.9 5.9 2.57 2.61 2.65 2.77 3.23 3.U9 3.71 3.3 3.1 3.0 2.8 2.6 2.3 2.1 a/ — — ,- —=• A p p r o v e d ^ i ^ d i t s _ on c u r r e n t account. — — • -<= 2.82 2.80 2.79 2.78 INTEREST ARBITRAGE, Thursday figures THREE-MONTH UNITED TREASURY RATE DIFFERENTIAL A N D STATES/CANADA BILL R A T E S FORWARD CANADIAN DOLLAR EXCHANGE COVER S P R E A D IN F A V O R O F C A N A D A + A X RATE DIFFERENTIAL W I T H FORWARD NET I N C E N T I V E IN F A V O B OF C A N A D A + -1JL INTEREST ARBITRAGE Friday NEW YORK/LONDON lijiin'i 3 - M O NTH Pj T K E A S U RY BI LL R A TES 2ATE DIFFERENTIAL A N D j 3 - M O N T H FORWARD STERLING i 1 l 1 i DIF F E R E N T I A L . W I T H RAT E F O F( W A R D EX(: H A N G E - COVER IN 1 - % V ^ w - AVOR < 1 1 M i i T 1 I S 1 1 I | D 195 9 I | I | M. J "i960" S 1 1 "6 1 1 1 1 M I I 1 1 J 1961 S 0 1 1 «T 1 1 1 1 J 1962 S 1 1 TT ID INTEREST Friday ARBITRAGE FOR GERMAN COMMERCIAL BANKS ligurti 3-MONTH Per c«nt TREASURY J EURO-DOLLAR BL L 1 5 , DEPOSIT LE "DING p>r annum RATI": A N D RATEO W\ RATE INTERBANK EURODOLLAR DIFFERENTIAL AND FORWARD DEUTSCHE MARK JJ 3 • FORWARD m f , I DISCOUNT (— } i V r x v '31 RATE DIFFEREINTIAL W ITH FORWARD wry iftirriiTivr* EXCHANGE 1 1 COVEIR 1— IN F A V O R 0 F F B A N K ? U R T 1 + ) 9 i LhJ m N J : I M T I C I A N : : i o AN RATE 1 , J \ \ LAV- 1 - / I f T R E A S U R Y RILLS 1 T I I 1 M 1960 Note: i s 1961 Special forward |rale ovailabU to G«rmon commercial banks • I D 1 1 « I T 1962 i i I S D | INT*3*ST ARBITRAGE, FRANKFURT/ L O N D O N Friday fig 3-MONTH TREASURY INTER 6 ANK ? ILLS AND LE N D IN G I A TES 3 \ A GERMAN INTERBANK; GERMAN TREASURY BILLS. RATE D I F F E R E N T I A L A N D | - 3 - M O N T H FORWARD STERLING S P R E A D IN F A V O R OF UNITED K I N G D O M GERMAN TREASURY BILLS O V E R : . ''VAX GERMAN INTERBANK LOAN RATE RATE — DIFFERENTIAL WITH FORWARD NET I N C E N T I V E 1 OF U N I T E D K I N G D O M OVER! EXCHANGE COVER j GEI BILLS SHORT-TERM INTEREST RATES * -V— I / \ CANADA SWITZIIIANO 3 month treasury bill roles for oil countries except Japan (3 month interbank depom rote) and Switzerland (3 month deposit rate) 3 month rale for U 5 dollar deposits :n London INDUSTRIAL STOCK INDICES* RALIO «TOIV 350 1959 Nole: I960 Jopon: Index of all slocks traded on Tokyo exchange. 1961 SPOT EXCHANGE RATES - MAJOR CURRENCIES AGAINST U.S. DOLLAR \/UCANADIAN DOllAR f JAPANESE YIN 3-MONTH FORWARD "AGAINST U. S. (AGAINST POUND EXCHANGE RATES DOLLARS STERLING . LONDON U.S. D O I U R AGAINST POUND STERL N G : LONDON BELGIAN 1960 1961 f»AHC
@FedFRASER