Most of this Commentary is concerned with the three months from August to October when, after an unsettled beginning, foreign exchange markets became general ly quiet and sterling developed a stronger tone. Confidence was encouraged at this time by the conclusion of arrangements at Basle early in September for a medium-term facility of $2,000 million to counter fluctuations in the sterling balances of sterling area countries; and, shortly afterwards, by the trade figures for August which showed another good rise in exports. These developments made it possible to reduce Bank rate from 7½% to 7% on 19th September. Short-term interest rates in the United Kingdom fell sharply - from their high levels - with the reduction in Bank rate, and mostly continued to decline afterwards. However, the trend in dollar interest rates in October was upwards.