Sterling Reserves Fall By £26m

Press, Volume C, Issue 29504, 4 May 1961, Page 8

Sterling Reserves Fall By £26m

(N.2.P.A.-Reuter—Copyright)

LONDON, May 2. The sterling area’s gold and convertible currency reserves fell by £26m. in April to a total of £1053m., the Treasury announced today. This followed falls of £62ni. in March and £lBm. sterling in February.

In April last year the reserves rose by £lBm, Last year the reserves rose in every month except in January. It was understood that during April £sm was paid out in connexion with bi-lateral debts under the European Payments Union. Financial quarters said that, generally, foreign exchange markets were still disturbed during the month. A lot of short-term money was going out of London, although not so much as In March. The drop of £26m in Britain’s reserves during April was smaller than many observers had expected and much smaller than the drop of £62m in March, Reuter’s financial editor wrote. During April, Britain paid £sm off her debts outstanding from the European payments Union. Without this the April loss would have been £2lm, he said. When Continental central banks are gaining sterling they can co-operate in such ways as buying British Treasury bills or putting or leaving gold and dollars in London on forward swaps (repurchase agreements), instead of taking all their gains in gold or dollars. Whether and to what extent. they did these things in April is not known.

In the upshot, Britain's reserves gained £327m in the twelve months up to last January and lost £lo6m in the subsequent three months. The recent losses are very unseasonal. In all recent years since 1952 the reserves had shown a gain in April. Nevertheless, the losses in March and April were much smaller than would normally have been expected after the turmoil created by the German and Dutch currency revaluations in early March. Without the Central Bank co-operation—and perhaps also without the German debt repayment if Germany acquired any o fthe relevant sterling in March—the losses would presumably have been heavier.