Sterling fared reasonably well in the three months May to July, with which this Commentary is mainly concerned. It came under sharp pressure early in May, as speculation developed on a revaluation of the Deutschemark; but, after the West German Government had announced their determination not to revalue, markets calmed down and sterling strengthened. Though it did not quickly regain all the ground which had been lost, the rate was rarely under $2-38¾ during the remainder of the period. Indeed, sufficient foreign exchange was taken in over the rest of the three months to make good the losses of early May and to continue repaying short and medium-term borrowing - a substantial amount of which had been repaid before May. On 18th July, the Chancellor of the Exchequer told the House of Commons that net repayments of external debt since the beginning of the calendar year had amounted to very nearly $1,000 million. In addition, there was some conversion from short to longer term debt, because $500 million drawn in June on a new stand-by credit from the International Monetary Fund was used to repay debt of shorter term .
Commentary