Exchange rates were still floating at the beginning of the three months November 1971 to January 1972 with which this Commentary is mainly concerned. On 18th December a general international realignment of rates was agreed in Washington, all the main currencies being revalued against the U.S. dollar. As part of this, sterling was revalued by just over 8½%, the new middle rate being $2.6057, compared with the old par value of $2,40. Beforehand, the movement of funds into the United Kingdom had been heavy. Afterwards the outflow was modest and there was also a continuing demand for sterling arising from the surplus on the current account of the balance of payments. Sterling appreciated against the dollar compared with its opening price after the agreement. The inflow from abroad in the December quarter and more importantly a continued sharp increase in bank lendingled to a much faster rate of increase in the money stock. The increase would have been even greater but for substantial official sales of gilt-edged stocks.