U.K. PROFITTED FROM AUTUMN INTERVENTION - LAWSON
Britain has reaped profits by using a
stronger pound to buy back dollars used by the government last
autumn to support sterling during a currency crisis, Chancellor
of the Exchequer Nigel Lawson said.
    He said in a parliamentary debate, "I can now tell the House
(of Commons) that the dollars that were sold from the reserves
in September and October (1986) have subsequently all been
repurchased - at a profit of some tens of millions of pounds."
    Hindsight had proved him right to resist market pressures
then for a two percentage point interest rate rise, he said.
The increase in base rates was instead limited then to one
point.
    During a debate on the 1987/88 British budget which Lawson
unveiled last week, he said that "during the period of foreign
exchange market turbulence which followed the somewhat
inconclusive Group of Five and Group of Seven meetings at the
end of September, I authorised the Bank of England to intervene
unusually heavily in order to buy breathing space that would
enable me to confine the interest rate rise to one pct rather
than the two pct the market was then pressing for."
    He said that that one percentage point increase, effected
in October 1986, had been reversed by this month's two half
point cuts in banks' base lending rates. They are now at 10
pct.
    Treasury figures show that the underlying change in British
reserves - seen as a guide to possible Bank of England
intervention on foreign exchange markets - suggest that the
authorities sold around 1.0 billion dlrs during September and
October 1986, government sources said.
 Reuter
