Dealings on the French stock exchange on Monday (21 January) left the French currency -- the franc -- around five per cent lower in value since the decision was taken on Saturday to withdraw it from the European fixed exchange system and let it find its own level.
GV French Stock Exchange
SV People entering (2 shots)
SV Sign 'Bourse' on building
TGV People on floor of Bourse
SV & GV Information boards (2 shots)
TGV High speed activity on floor
SV PAN FROM People to currency information boards (3 shots)
TGV Activity on floor (??? shots)
GV Orly airport
People at exchange counter
SV People exchange money (2 shots)
SV Exchange counter
GVs Frankfurt stock exchange
CV Sign "Wertpapierborsh"
CU & SV "Closed" sign in doorway
SV People entering side door
Initials BB/0314 JT/PN/BB/0339
Script is copyright Reuters Limited. All rights reserved
Background: Dealings on the French stock exchange on Monday (21 January) left the French currency -- the franc -- around five per cent lower in value since the decision was taken on Saturday to withdraw it from the European fixed exchange system and let it find its own level.
The French Finance Minister, M. Giscard D'Estaing, said that the franc had been 'floated' to protect French currency reserves, which had been under pressure in recent weeks, and allow the country to increase exports at a time when it faces a possible balance of payments deficit due to greatly increased oil prices. M. Giscard D'Estaing further justified his action by saying that there could be no real European financial policy while Britain and Italy stood outside it. They both allow their currencies to float independently.
But there was a surprised and bitter reaction among the five members of the European Economic Communist still participating in the joint currency float -- West Germany, Belgium, Holland, Luxembourg and Denmark.France has always been the most ardent supporter of a fixed exchange rate system.
The French operate a two-tier system of financial and commercial france -- the Commercial France for trading and official purposes and the Financial France for tourism and investment. The Financial France, which has always floated freely, also lost value on Monday.
The West German Foreign Exchange Market remained closed on Monday. A spokesman for the West German Finance Ministry said this was to enable the remaining members of the European joint float to discuss the effects of the French action under stable conditions. The German exchange will re-open on Wednesday.
SYNOPSIS: At the end of the day's dealings the franc had lost around five per cent of its value compared with last week. The Bank of France intervened to stop it sinking any further, indicating they will not allow it to float too far downwards.