Public are Asking Whether Sterling Slide Ought to Be'
Definitely Checked More und more people are asking whether the slide in sterling has! reached a point at which it ought to] be definitely checked. At one time yesterday the dollar rate dipped to 4.62%—the lowest rate for over five} years, apart from a brief flurry on the Wednesday of the Sep'ember economic crisis. Earlier this year the} rate was standing well above $5.00 to the £: and although the subsequent decline has been a matter of only 8 per cent, it isthe more s'riking by contrast with the long period of ability which preceded it. And it has taken place side by side with a loss of gold which has been estimated at well over £200 millions since the end of March. Few people in this country will regret tht fall in sterling itself: but the withdrawal of foreign capital, and he loss of gold which has accompanied it, have now gone so far that our monetary policy must be drawn up with at least some regard for its effect on our remaining gold stocks, says "The Financial Times."
To suggest that the loss of gold this year might -have been smaller, and not larger, had the rate been held at some intermediate position, is a barren, but an arguable, proposition. So far as movements of capital have been occasioned by purely political fears, they would doubtless have taken place whatever the rate of exchange. But after a certain point, a depreciation in a currency (and still more, the expectation of a further fall) actually tends to accentuate an exodus of capital. And there have been indications recently that this snowball effect has been in operation. It is thus relevant to enquire whether the authorities might not be well advised to hold rates at about their present level.
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