DIVISION OF INTERNATIONAL FINANCE BOARD OF GOVERNOR# CAPITAL MARKET DEVELOPMENTS ABROAD

Transcription

1 DIVISION OF INTERNATIONAL FINANCE BOARD OF GOVERNOR# H. 13 No. 197 May 26, 1965 CAPITAL MARKET DEVELOPMENTS ABROAD I, Germany : II. Nine Charts on Financial Markets Abroad III, Latest Figures Plotted in K. 13 Chart Series I. Germany; Money and Capital Markets, November 1964 to May 1965 The continued tightening of the liquidity situation in German financial markets since early 1964 culminated on May 5 in heavy sales of outstanding bonds and the establishment of a 7 per cent effective yield on long-term bonds of Federal government agencies. Table 1. Selected Financial InUcators a January 1964-May / s,rs indicated; Bond yields 5-1/2% Railroad Bonds ( ) (%p.a.) FAZ: 6% Public Auth. loans (% p. a, ) Rates for Call money in Frankfurt (monthly midpoint, % p, a/) Credit institutions borrowing at Bundesbank (DM billions) Stock price index FAZ index (12/31/58=100) Jan, , June Sept. Dec. Mar. Apr. May 14 6,35 b, J / End of month figures except where indicated. Throughout 1965 ; yields have been rising steadily. Between the end of January and May 14, yields on 6 per cent bonds of public authorities rose from 6,52 to 7=11 per cent and the rate for call money rose from 2.50 to 4.31 per cent. (See Table 1,) Bond yields have since advanced further. The tightening of domestic liquidity has been produced by the restrictive policies of the Bundesbank and by the cessation of the inflow of foreign funds. Since the second half of 1964, the borrowings of the credit institutions from the Bundesbank have r.yid around DM 4 billion. (See Table 1.) At the same time, the continued German business expansion and concurrent increases in financing requirements have placed increasing demands upon the German capital market. The inauguratic-n of the American balance of payments program has added further to the strain; German firms have sought credi ts in OFFiCIAL USE ONLY ^Decontrolled after 6 months)

2 OFFICIAL USE ONLY - 2- Germany to replace loans from United States banks; at the same time, foreign subsidiaries of U.S. firms, which had previously been supplied with funds by the parent company, have been seeking financing in European centers, Tightening credit conditions contributed to a shake-out in the German bond market in early May. With reduced liquidity, private holders made sales of outstanding government bonds and the public authorities actively supported bond prices in order to hold yields within the 6 per cent range. Authorities further found it necessary to shorten the maturities and reduce the issue price of new flotations. In this situation, the policy of supporting all issues of the same coupon at the same market price, regardless of maturity, merely provided an added incentive for investors to sell outstanding securities and purchase new issues. At the same time, the commercial banks. continuing their standard practice, sold old issues of bonds in order to make large purchases of new offerings and thereby profit from the bonus granted large-block purchasers. Furthermore, the mortgage banks were selling government bonds in order to improve their liquidity position. Finally, yields being offered in the direct placement market (that is, securities placed directly by a broker with a financial institution outside the established capital market) were attractive erough to induce private investors to sell government bonds. On May 5, sales of public authority bonds became quite heavy and the - Bundesbank, in consultation with Government and Public Authorities, decided tc give up support operations. The price for 6 per cent government issues fell from 96 to 94-1/4 in two days of trading; on May 7 the Bundesbank announced the reduction in the price of the new Bundesbahn issue from 96 to 94-1/2 and a refund of the 1-1/2 per cent difference to those who had bought at 96 per cent, This decision meant that the public authorities had decided it was no longer possible to maintain a coupon rate in the 6 per cent range, The authorities had been trying to maintain the coupon against persistent market pressure ever since the proposal of the 25 per cent tax on bond yields to non-residents in March According to press reports, yields on outstanding bonds have risen above 7 per cent to a level of 7.11 per cent. The Central Bank Council has just approved a forthcoming issue of the ] :!Rheinland-Pfalz which will introduce a 7 per cent coupon on the market next/week. Monetary authorities reaffirm credit-tightening policies After the bond market disturbance on May 5, German authorities reaffirmed the measures which had been taken to contrc. the expansion of domestic liquidity and disappointed hopes that restrictive measures would be relaxed in response to the situation on the capital market. On January 22, the Bundesbank raised the discount rate from 3 to 3-1/2 per cent. At the same time, the Bundesbank increased the rate for advances against securities from 4 to 4-1/2 per cent and raised the selling rates of OFFICIAL USE ONLY

3 OFFICIAL USE ONLY open-market paper between 1/2 to 3/4 of one per cent. Since the beginning of March, however, rates on day-to-day money have been substantially above the discount rate. This fact, together with the upward movement in long-term yields and the continued business expansion, have created the expectation that short-term rates may again be raised shortly. According to the press, German banking circles expect the Bundesbank either to raise discount rate again, perhaps to the 4 per cent level, or to change the regulations governing deposit rates so as to further raise these rates (which had been advanced on March 1.) The German press has compared the present situation to conditions prevailing in 1960 when long-term bond yields were last at 7 per cent. At that time, however, discount rate was at 5 per cent and yields on savings deposits were 4 per cent, compared to the current 3.5 per cent level. During 1960, the tightening of German credit availabilities at a time of strong business advance produced large differentials in interest rates between Germany and other countries, particularly the United States, and helped to set off large-scale capital inflows into Germany: these inflows finally culminated in the appreciation of the D-mark in March However, Dr. Benning, director of the Bundesbank, has stated that the current international liquidity situation is not one that would give rise to a similar course of developments._&/ Long-term lending rates rise to 7 per cent on the bond market After weeks of mounting pressure on interest rates, authorities in Germany gave up their attempts to restrain the upward movement of long-term rates. In the first week of May, an interest level of 7 per cent was established in the bond market. There had been a very substantial tightening of credit conditions in Germany over the past months as a result of an actively restrictive central bank policy and the virtual equilibrium of the balance of payments in the second half of As a consequence of the tightening credit situation, bond prices, which had stabilized towards the end of 1964, began to weaken again in January and yields on 6 per cent public authority bonds advanced persistently from 6.43 per cent in December to 6.52 per cent at the end of January and to 6.70 per cent by the end of April. Market pressure continued to build up and public authorities found themselves forced in March to reduce the support price for their bonds from 98 per cent of par to 96 per cent. Pressure continued to mount, however, and on May 5 the Bundesbank, as agent of the public authorites, withdrew its support of bond prices in the face of massive sales of outstanding public authority bonds of longer maturity. At that point, yields from about 6.7 per c?nt to 7.1 per cent, and have since drifted higher. 1/ Frankfurter Allgemeine Zeitung, May 12, 1965, p. 24. OFFICIAL USE ONLY

4 OFFICIAL USE ONLY The immediate causes of the heavy bond sales of May 5 were rather technical. The decision of the public authorities to support all bonds of identical coupon at the same price, regardless of the length of maturity, had created a situation in which higher yields were to be realized from the bonds of shorter maturity. Holders of public authority bonds of longer maturities traded them in increasingly larger quantities in favor of the shorter-term bonds. This situation moreover was compounded by the commercial banks' practice of selling off outstanding bond issues in order to finance the purchase of large blocks of new offerings and thus profit from the bonus given in the form of a deduction from the issue price to large takers of new issues. The underlying source of the market's weakness, however, was the tightening credit situation, which led, among other things, to a movement of private funds out of the government securities market and into the private placements market where especially attractive rates were obtainable. In addition, the mortgage banks sold long-term government bonds in volume in order to acquire funds for loans. The situation came to a head on May 5 <' r " bank sales of securities in anticipation of the new Bundesbahn issue, in combination with accumulated offerings from other investors, resulted in passive sales. At that point, the Government yielded to the pressure and allowed the interest rate to find its own level. Prices on Government bonds fell from 96 to 94-1/2 per cent of par. The Government later made good the difference to investors who had purchased the new Bundesbahn issue at 96 per cent before the market broke. The 7 per cent interest rate appears to be firmly established. Yields on public authority bonds stabilized at a level of 7.11 per cent in the third week of May and all new issues are now expected to carry a 7 per cent coupon. It is further expected that public authorities will now adopt a more flexible price support policy, with support prices differing according to the maturities. Hopes that the restrictive credit policy would be eased because of the capital market situation were disappointed by the Bundesbank's announcement that the maintenance of internal stability took precedence over lower capital market rates and that it would therefore continue to pursue its policies as before. The Cabinet publicly endorsed Bundesbank policy following its meeting on May 10. As a result of the increase in long-term lending rates, short-term interest rates are also expected to rise further. The Bundesbank is soon expected to take steps to close the gap between capital market yields and money market rates. Thus the financial press has been expecting the Bundesbank shortly to raise the discount rate from 3-1/2 per cent to 4 per cent, OFFICIAL USE ONLY

5 OFFICIAL USE ONLY thereby automatically raising deposit and lending rates; as an alternative, interest rates could be raised through a revision of the interest rate regulations, leaving the discount rate at its current level. Market sources advance the opinion that some step must be taken soon to maintain order in the credit and capital markets. Following the bond market upset, a pause in new issues was declared-- the second so far this year--and a number of planned public authority loans were postponed. Furthermore, the government announced its intention of curtailing its planned volume of borrowing during the rest of the year. It is doubtful, however, that these measures can materially relax market tensions:a deferment of new issues now could mean that the market will be hit even harder later in the year with accumulated financing needs. It must further be borne i- mind that the y - A. - : 'ties have received little net new cash from the DM 850 million floated on the bond market so far this year since a large part of the funds so acquired were exhausted in supporting the price of outstanding issues. The financing needs of the public authorities presents a ticklish problem: if requirements cannot oe satisfied on Lhe capital market, either cash balances would have to be drawn down or a^auces taken up from the central bank. Either of these steps would add to inflationary pressures. ^ Table 2. Germany: Gross Placements in Securities Markets 1964-February 1965 (millions of DM, month or monthly average) IV I II III IV Jan. Feb. "Occasional" borrowers bonds: Industrial Public authorities Foreign issuers Other bonds_2/ Total Mortgage and communal bonds Total gross bond placements 3/ Gross share placements Total security placements at issue value 15L: _1 / Market value. 2/ Mostly bonds of specialized credit institutions. _3/ Includes medium-term notes (Kassenobligationen). Source: Deutsche Bundesbank Monthly Report. OFFICIAL USE ONLY

6 OFFICIAL USE ONLY Stock market remains weak Despite bright business prospects and favorable company statements for the year 1964, the stock market has remained weak in the period under review. Share prices continued the indecisive downward drift which began in September The FAZ general stock index fell 6.2 per cent between the end of December and the beginning of May. Political considerations--domestic and international--appear to be among the factors which have affected the stock market adversely. Market weakness has further been accentuated by substantial foreign sales since March. These have reportedly come largely from U.S. interests, perhaps in response to the U.S. balance of payments program. It is quite probable that the increasingly attractive yields on the bond market may deflect funds from the stock market, causing it to weaken further. The public sale of shares in the government-owned Vereinigte Elektrizitaets und Bergwerks, A.G. (VEBA) is expected to begin May 24. The government will offer about DM 788 million of nominal capital stock of the company to lower income groups as part of its promotion of~property formation by this economic group. German money market increasingly under effects of credit tightening measures The tightness of the credit situation in Germany was reflected also in the level of rates on the money market. Increasingly tighter credit conditions were experienced on the money market from November to April as the Bundesbank continued to limit the rate of credit expansion. Only during December and January were there periods of temporary ease. After the rise in discount rate from 3 to 3-1/2 per cent at the end of January, rates gradually tightened during February. By March and April, rates for day-to-day money ranged between 4-4-3/8 per cent,or between 0.5 to 1.0 per cent above the new discount rate. Rates for three-month money were as high as 4-5/8 per cent by the end of April. (See Table 3.) There was no easing in the rates for either call or three-months money in the first half of May. The earlier ease in the money market during January was the combined result of seasonal factors and heavy borrowing by the commercial banks at the Bundesbank in anticipation of an increase in the discount rate. Following the increases in the discount and other short-term interest rates on January 22, conditions in the money market eased somewhat further, due to a temporary discontinuation in the sale of open-market paper by the Bundesbank. This action increased the incentives for the placement of funds abroad by the banks. Observers also speculated that the action was taken, inpart, to "punish" the banks for the heavy anticipatory borrowing prior to January 22. In the last week of January, day-to-day money fell to a range of 1-1/2-2 per cent and no takers of funds were reported on several days. OFFICIAL USE ONLY

7 OFFICIAL USE ONLY - 7-1/ Table 3. Germany: Money Market Rates in Frankfurt October 1964-April 1965 Day-to-day money Three-month loans October 2-1/ /4-5-1/2 November 2-1/2-3-3/4 5-3/8-5-5/8 December /2 5-1/8-5-1/ /4-5-1/2 5-1/4 January /8-3-3/8 3-3/ /8-3-1/8 3-7/ / / /4 February /4-3-3/8 3-3/ /8-3-1/4 3-7/8-4-1/ /8-4-1/4 3-3/ /4-4-1/ /8 March /4 4-1/8-4-3/ /4-4-1/ / /8 4-1/ /4 4-1/4-4-5/8 April /8-4-1/4 4-1/ /8-4-1/4 4-3/8-4-1/ /4-4-3/8 4-1/2-4-5/ /8 4-1/2-4-5/8 1/ Highest and lowest rates quoted each week (month) by Frankfurt banks. Source: Deutsche Bundesbank. In a further restrictive move, the Bundesbank announced that due to the increase in funds from capitalization available to commercial banks, rediscount quotas would be reduced October 1, 1965 by what market sources estimate will be an average of 25 per cent. It is expected that this measure will not affect the large banks since they rarely avail themselves of their rediscount privileges to the full extent possible; however, smaller private banks with smaller liquidity margins will probably feel the pinch to a certain extent. On the whole, therefore, the restrictive effects of this measure are expected to be relatively moderate. The restrictive policy of the Bundesbank was lent unexpected support in February when President Johnson announced the U.S. balance of payments program in which U.S. banks were asked to limit the increase in lending to foreigners to 5 per cent for the year ending in February 1966 and major U.S. companies were asked to improve their individual balance of payments position. The reduction of U.S. foreign bank loans which has taken place has undoubtedly contributed to the tightening of the German money market. There has furthermore been some speculation that U.S. firms have withdrawn funds from foreign subsidiaries, thus forcing the foreign branches to take their increasing financing needs to the German capital market. OFFICIAL USE ONLY

8 OFFICIAL USE ONLY Trade balance improves in first quarter The German trade balance improved sharply in the first quarter of 1965 thanks to a stronger performance of exports in each of the first three months. Over the quarter as a whole, exports rose 7.0 per cent and imports 2.8 per cent. (See Table 4.) This was a reversal of the pattern experienced throughout 1964 when the rapid economic expansion and increases in incomes caused imports to advance more rapidly than exports and resulted in a progressive deterioration of the trade balance. It is not likely, however, that the recent improvement will be maintained since consumer demand remains strong; in addition, imports usually grow more slowly in the first quarter than in the other quarters of the year. In fact, seasonally-adjusted trade figures show a small deficit of DM 70 million for April. Table 4. Germany: Merchandise Trade, 1964-April 1965 (seasonally adjusted monthly or monthly average, in DM billions) Exports f. o.b. Imports c. i, f. Industrial goods Imports Trade balance I II III IV I /. 39 Jan Feb Mar a/.53 Apr. j}/5. 36 /5.43 a/ -.07 &! not available JD/ preliminary Source: Deutsche Bundesbank The expansion of exports follows the rapid growth of new foreign orders in the second half of In the first two months of this year, however, seasonally adjusted incoming foreign orders were 7.2 per cent lower than in the November-December period and 2.5 per cent lower than the corresponding level of one year ago. Balance of payments The German balance of payments for the fourth quarter of 1964 showed a surplus of DM 124 million, almost exactly offsetting the third quarter deficit of DM 160 million. The fourth quarter surplus was produced by a modest improvement in the goods and services account and by a large inflow of private short-term capital, resulting from the sterling crises in November and December as well as the seasonal window-dressing operations of German commercial banks towards the end of the year. These inflows were.offset in part by large official payments abroad. (See Table 5.) OFFICIAL USE ONLY

9 OFFICIAL USE ONLY Table 5. Germany: Balance of Payments, 1964-February 1965 (in millions of DM) I II III IV Jan. Feb. 1. Goods and Services Trade balance Services Total 2. Official Payments Donations Long-term capital Short-term capital Total 3. Private Capital Long-term Short-term 2/ Errors and omissions Total Surplus or Deficit (-) / Preliminary 2/ Includes commercial bank capital other than foreign exchange assets. Source: Basic data from Bundesbank and International Financial Statistics rearranged by author. In January 1965, the balance of payments was in virtual equilibrium. In February, however, a surplus of DM 306 million was realized. This was caused by a seasonal improvement in goods and services and by a considerable reduction in the size of official payments. The private capital account was largely in balance on the whole; however, sizeable movements took place in the individual items. Large increases in February in the inflow of long-term capital and in the outflow of short-term capital may, in part, reflect the movement of capital both in anticipation and later in response to President Johnson's balance of payments program which was announced during that month. Small first quarter increase in reserves Large shifts of foreign reserves in January, during which period the Bundesbank lost $365 million and the commercial banks gained $397 million, was related to the unwinding of window-dressing operations by commercial banks. The export of funds by commercial banks was encouraged in January by the temporary excess of domestic short-term liquidity and by the halt in the sale of open market paper by the Bundesbank. OFFICIAL USE ONLY

10 OFFICIAL USE ONLY Commercial banks' foreign exchange assets declined by a total of $220 million in February and March, however, as banks repatriated funds to ease their liquidity positions and prepare for the major mid-march tax date. These movements were reflected in the $254 million increase in Bundesbank reserves during February and March, As a result of these largely offsetting movements, total German reserves rose only $49 million in the first quarter. Bundesbank reserves declined $36 million in April and commercial banks reportedly reduced their balances abroad by $15 million. Table 6. Germany: Changes in Reserve Position (in millions of U.S. dollars) A. Bundesbank gold and foreign exchange Gold Foreign exchange Total B= Drawing rights on IMF Dec. III IV I Jan. Feb. Mar. Apr " a/ Cc Commercial banks foreign exchange Total A through C a / a/ Not available. Source: IMF, International Financial Statistics: Bundesbank, Monthly Report. The movement of the German balance of payments towards equilibrium in the second half of 1964 was reflected in the stability of official foreign exchange reserves, if drawing rights on the IMF are included. Bundesbank gold and foreign exchange reserves declined by $189 million during this period but this decline was offset by an increase of $214 million in IMF drawing rights during the last quarter. Commercial bank foreign exchange reserves had declined slightly by the end of the second half of the year, however the usual inflow of commercial bank reserves at the end of the year due to window-dressing and other seasonal needs was eased by the Bundesbank's offer of credits to commercial banks at reduced rates between December 10 and 31. With commercial bank holding of foreign exchange also changing little on the whole during the second half of 1964, the total reserve position of the central and commercial banks declined by $20 million during the period. OFFICIAL USE ONLY

11 OFFICIAL USE ONLY Rate for DM weakens slightly in April and May The foreign exchange rate on the D-Mark sagged considerably in late April and early May, perhaps in response to a large efflux of funds as foreign workers and German vacationers streamed into Italy and France during the spring holidays. The rate moved down from cents in mid-april to cents in mid-may. Prior to that, the rates had reflected a relatively good demand for DM, particularly as commercial banks found it necessary to bring back funds from abroad in the second half of February and in March i% order to shore up their liquidity positions. As a consequence, the rate reached a high of cents at the beginning of April. In January, on the other hand, the reexporting of funds by the banks following year-end window dressing operations caused the rate to slide to a low of cents at the end of that month. The premium for three month forward DM moved rather much in accord with developments on the spot market, widening as the quotation on the DM rose and falling as the rates weakened. Table 7. (in U. S. cents per DM and per cent p. a. ) Par value Upper limit Lower limit Spot 1/ Forward Spot Forward Rate Rate Rate Rate 1964 Nov % 1965 Feb = 27 25, % = Dec = = = Mar = = = 1965 Jan = = Apr a/ = = = = May = = a/ April 5. 1/ Noon buying rates. 2/ Rate for three month forward DM. Source: Federal Reserve Board. II. Nine Charts- on Financial Markets Abroad Chart 1 - International Money Market Yields for U.S. Dollar Investors Chart 2 - Interest Arbitrage, United States/Canada Chart 3 - Interest Arbitrage, New York/London Chart 4 - Interest Arbitrage for German Commercial Banks Chart 5 - Short-term Interest Rates Chart 6 - Long-term Bond Yields Chart 7 - Industrial Stock Indices Chart 8 - Spot Exchange Rates - Major Currencies Against U.S. Dollar Chart 9-3-Month Forward Exchange Rates 2/ OFFICIAL USE ONLY

12 Table 8. Germany? Selected Money Market Yields and Exchange Rates (per cent per annum) 3-mo. Euro- 3=mo«U.S. $ dollar de- 3-BIO. inter- Spread into Marks 3 mo* Treas. bills posits bank loans in favor Comm. London Frankfurt London bank Market U.K. Ger. U.S. Nov o Dec. 31 4, = , Jan, , , , Feb , , , = , ,56 4, ,25 +0, , Mar , , 25 +0c 3 6, , , , ; , , Apr , o , , ,56 +0, May n, a. n, a C ,88 n. a. n. a. +0, c 12 3,88 Table 9. Germanys Selected Loan, Deposit and Security Rates (per cent per annum} Bond yields Comm mo. deposits 5-1/255 Public bank Railway author- Share Yield loans1/ Savings Time 1 rnl? 8 Yields February March April May June July August ,4 September October , November ,4 3, December , January 4/ February C 75 6, March , April , , 71 n. a. n. a; May 14 n. a. n. a. 6,81 n. a. n. a. 17 Approved credits on current account. 2/ Beginning on March 20, 1964, commercial banks are prohibited from making interest payments on new foreign owned time deposits, 3/ Monthly averages of end-of-week figures. 4/ Effective January 22. gap

13 INTERNATIONAL MONEY MARKET YIELDS FOR U.S. DOLLAR INVESTORS 3-MONTH EURO DOLLAR DEPOSIT VS. CERTIFICATE OF DEPOSIT EURO-DOLLAR OVER SELECTED INTERNATIONAL MONEY RATES Friday figures EURO-DOLLAR DEPOSIT RATES (LONDON) U.K. HIRE PURCHASE ] CAHAP1AHJJLMAHCE COMPANY

14 INTEREST ARBITRAGE, UNITED STATES / CANADA M O N T H T R E A S U R V J l I L L R A T E S I B 1 L L R A T E D I F F E R E N T I A L AND F O R W A R D C A N A DJ A_NL_DQ L L A R 3 - M O N T H C O V E R E D R A T E D I F F E R E N T I A L S ' N E T I N C E N T I V E S ) -

15 K INTEREST ARBITRAGE, NIW YORK/LONDON Frldoy 11 fl u n i 3 -MONTH TREASURY BILL RATES U.K. IQCAL AUTHOHIV HFOSITS 10NP0N I mw YOU RATE DIFFERENTIAL 1 AND 3-MONTH FORW'A R D "S TTR U N c l SFIIA0 IN FAVOI OF TOMDON RAT DIFFERENTIAL WITH FORWARD EXCHANGE COVER (NET INCENTIVE) T mi i!

16 V 5 Chort 4 INTEREST ARBITRAGE FOR GERMAN COMMERCIAL BANKS 3-MONTH TREASURY BILLS, INTERBANK LENDING RATE! AND EURO-DOLLAR DEPOSIT RATES - ] 1 p GERMAN INTERBANK V V' RATE DIFFERENTIAL AND FORWARD DEUTSCHE MARK DISCOUNT : TMSURY BILLS RATE DIFFERENTIAL WITH FORWARD EXCHANGE COVER (NET INCENTIVE) Wl IN FAVOR Of 10ND0N EURO-DOllARS 1965

17 n Chof> 5 V. SHORT-TERM INTEREST RATES* -VI IUI0-D0UAI - LONDON U.K. P ^ ' CANADA SWITZIIIAND 44 j 3 m o n th Ireoiury bill role«for oil countriei except Japan. (Average rale on bonk loom and ditcounti) and Switzerland (3 month deposit role) "}" 3-month role for U S dollar depoiili in London.

18 Ck«n t LONG-TERM BOND YIELDS - / Mil

19 INDUSTRIAL STOCK INDICES letle stele 200, Swiss Bonk Corporation industrial stock.

20 Ch«ft 8 SPOT EXCHANGE RATES - MAJOR CURRENCIES AGAINST U.S. DOLLAR SWISS FRANC GERMAN MARK U.K. STERLING FRENCH FRANC DUTCH GUILDER I 1 i I! i 1 1 CANADIAN DOLLAR { JAPANESE YEN

21 3-MONTH FORWARD EXCHANGE RATES AGAINST U.S. DOLLARS GERMAN MARK SWISS FRANC AGAINST POUND STERLING - LONDON MARK A SWISS FRANC AGAINST POUND STERLING - LONDON GUILDER \ j/ FRENCH FRANC

22 H. 13 No. 197 III. Latest Figures Plotted In H. 13 Chart Series, 1965 May 26, 1965 Chart 1 Per cent per annum Chart 5 Per cent per annum Upper panel (Wednesday, May 19 ) Euro-$ deposit 4.88 U.S. certif. of deposit 4.32 Lower panels (Friday, May 21 ) Euro-dollar: Call day day day day 5.19 Finance Co. paper: U.S Canada 4.88 Hire-purchase paper, U.K Chart 2 (Friday, May 21 ) Treasury bills: Canada 3.76 U. S Spread favor Canada Forward Canadian dollar Net incentive (Canada +) Chart 3 (Friday, May 21 ) Treasury bills: U.K U.S Spread favor U.K Bonds: (Friday, May 21, except as noted) Treasury bills; U.S. U.K. Germany Canada Swiss 3-month deposits (Date: April 15 ) Euro-$ deposit (London) Japan: composite rate (Date; Dec. 31 ) Chart 6 U.S. govt, (Wed., May 19 U.K. war loan (Thurs., May 20 German Fed. Railway (Fri., May 21 Swiss Confederation (Fri., May 14 Canadian govt. (Wed., May 12 Netherlands government perpetual (Friday, May 7) (Friday, May 14) L Forward pound Net incentive (U.K. +) For description and sources of data see September 23, special annex to H. 13 Number 164,