European foreign exchange dealers adopted a cautions approach to the troubled American dollar when dealing against European currencies restarted today (Monday) for the first time in a week.
European foreign exchange dealers adopted a cautions approach to the troubled American dollar when dealing against European currencies restarted today (Monday) for the first time in a week. United States hopes that sterling and other currencies might be revalued to save devaluation of the dollar were not realised. But in most centres, the new rate against the dollar amounted to an effective one or two per cent upward revaluation of European currencies.
Our coverage takes a behind-the-scenes look at two of the most important Foreign Exchange markets, Paris and London. In France, the dollar emerged stronger than expected as the French launched a new two-tier foreign exchange system -- a floating rate for financial transactions and a fixed rate for business exchanges. In London, sterling showed a typical two per cent revaluation against the dollar.
SYNOPSIS: In Europe, foreign currency exchanges re-opened on Monday. And the big question was how the dollar would progress:
Americans in Paris watched anxiously to see how the dollar exchange rate compared with European currencies. The foreign exchanges had been closed for a week following President Nixon's drastic action to support the dollar. Dealings in Paris were fairly typical of Europe as a whole, with the dollar emerging stronger than expected. But U.S. hopes that European currencies might be revalued were not realised.
In London, too, dollar emerged stronger. Sterling showed a two per cent revaluation against the dollar and this sort of reaction was typical of Europe as a whole. The general opinion was that the onus was on the Japanese to finally restore western financial equilibrium.