International financial developments

Quarterly Bulletin 1981 Q4
Published on 01 December 1981
  • Following a further weakening in demand for oil and continued rapid growth of their imports, the oil exporters' surplus has shrunk considerably; the main counterpart has been a reduction in the combined deficit of major OECD countries.
  • Oil importing developed and developing countries alike made greater use of reserves in financing current account deficits in the first three quarters of 1981.
  • Partly reflecting this pattern of deficit financing, there was a continued slowdown in the underlying growth of international bank credit in the third quarter of the year.
  • Exchange markets were both nervous and volatile from August. Important factors were interest rate developments, the OPEC oil price discussions and the realignment of currencies within the European Monetary System.
  • Sterling fell sharply early in September but recovered after the authorities had moved to raise short-term interest rates.

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