U.K. MONEY RATES FIRM ON LAWSON STERLING TARGETS
Interest rates on the London money market
were slightly firmer on news U.K. Chancellor of the Exchequer
Nigel Lawson had stated target rates for sterling against the
dollar and mark, dealers said.
    They said this had come as a surprise and expected the
targets, 2.90 marks and 1.60 dlrs, to be promptly tested in the
foreign exchange markets. Sterling opened 0.3 points lower in
trade weighted terms at 71.3.
    Dealers noted the chancellor said he would achieve his
goals on sterling by a combination of intervention in currency
markets and interest rates.
    Operators feel the foreign exchanges are likely to test
sterling on the downside and that this seems to make a fall in
U.K. Base lending rates even less likely in the near term,
dealers said.
    The feeling remains in the market, however, that
fundamental factors have not really changed and that a rise in
U.K. Interest rates is not very likely. The market is expected
to continue at around these levels, reflecting the current 10
pct base rate level, for some time.
    The key three months interbank rate was 1/16 point firmer
at 10 9-7/8 pct.
