Financial Notes
FALL IN THE
THE sharp reaction which has occurred in British Funds and kindred securities during the past week has clearly demonstrated two facts, the first being that markets are still sensitive to any violemt movements in the value of the pound, and the other being that some part of the recent prolonged rise in gilt-edged securities has been connected with speculative buying, thus leaving the position sensitive to any adverse influences. And what, it may be asked, has bten the chief cause of the sudden fall in the value of the pound and what -is the. precise . significance of the decline / The causes arc not far to seek. For some months sterling exchange has been fairly steady, the various influences affecting it being pretty evenly balanced, while possibly any signs of mere speculative operations for the fall may have been checked by those here in charge of the Exchange Equalization Fund taking steps to check such operations. During the final three months of the year, however, there is usually a naturally -weak tendency in the pound owing to the fait - that within that period our payments abroad for foodstuffs and raw materials are very heavy. Accordingly, I should say that there was probably a disposition on the part of the authorities here to let the sterling exchange follow its natural course, and inasmuch as this seasonal tendency in the exchangc is perfectly well recognized abroad, it is probable that the moment was considered to be opportune for a renewal of Bear sales by speculators and that the authorities deemed it unwise and wasteful to impose any immediate check.
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