Word: franc
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...formal acceptance of these new values, if combined with about a 5% to 8% devaluation of the dollar in terms of gold, would go far toward meeting Washington's immediate goal. On the foreign side, Pompidou flatly opposes revaluation of the franc, but many other governments recognize that official exchange-rate readjustments are necessary in order to correct the obvious overvaluation of the dollar. "We all know what needs to be done," says The Netherlands' Jelle Zijlstra, chairman of the Bank for International Settlements. Japanese delegates, for instance, are reluctantly prepared to offer an 8% revaluation...
...would drop in relation to other currencies and thus make U.S. goods cheaper in world markets. The first test of this strategy proved mildly hopeful. The dollar drifted down slightly in money markets, but nothing like the expected 12% to 15%. At the close of trading last week, the franc had risen by 2.8% in relation to the dollar, the mark by 7.6%, the Swiss franc by 2.5%, and the pound by 3%. Put on a limited float at week's end, the Japanese yen rose as much as 7% in the first day's trading...
...guard against an outbreak of speculation should the dollar begin to sink in the weeks ahead. As the week progressed, that plan hardly seemed necessary. With the Swiss Central Bank poised to buoy up the price of the dollar if it fell below an undisclosed "base level," the Swiss franc merely wobbled fretfully anywhere from 1.2% to 2.8% above its normal dollar exchange rate. In Paris, where a complex two-tier system separates fixed-rate international trade and business dollars from tourist and capital investment dollars, the U.S. currency stayed within 3% of parity for free-floating transactions. In London...
...which has always refused even to consider devaluation. Even so, it convinced many money men that such a move might be secretly under consideration in Washington. Only two years ago, after all, President Georges Pompidou chose the depths of the August business doldrums to lower the value of the franc by 12½%. Now, profit-seekers rushed to the Continent's central banks to exchange their greenbacks for currencies that would presumably rise if the dollar were devalued. The price of the dollar was forced down in France, West Germany, Switzerland, Italy and Britain. Other speculators traded hectically...
...Door Devaluation. The West German mark and Dutch guilder were allowed to float-find their own value in free trading. By week's end the mark had floated up 3.7%, to 28.3?, and the guilder had risen 2.2%, to 28.2?. Two other currencies were formally revalued: the Swiss franc went up 7%, to 24.46?, and the Austrian schilling 5%, to 4.04?. Belgium adopted a perplexing two-price system for its franc, maintaining the old value of 2.01? on export-import dealings and letting the rate float on investment and loan transactions; at week's end the free rate...