Читать книгу Foreign Exchange: The Complete Deal - James McDowell. Sharpe - Страница 11

In March 1968 the US established a two-tier market rate for gold in an effort to mitigate the drain on their gold reserves. In this system all central-bank transactions in gold were insulated from the free market price. Central banks would trade gold among themselves at $35 per troy ounce but would not trade with the private market. The private market could trade at the market price and there would be no official intervention. By 1970, however, US gold reserves were down to $11bn, a fall of around 61% in ten years.

The end came in August 1971, when there were massive outflows of dollars. Much of the speculative activity was in favour of the Deutschmark, partly due to relatively favourable interest rates. On 15 August 1971 President Nixon announced the closure of the gold window; in other words, the dollar would no longer be converted into gold. This effectively meant that the Bretton Woods Agreement to establish a new monetary order had foundered. Official parities and intervention points were suspended and most major currencies began a clean or managed float.

In December 1971 negotiations got underway at the Smithsonian Institution in Washington to arrange the devaluation and stabilisation of the dollar. Eventually new parities were agreed against the dollar. These reflected varying rates of devaluation for the dollar: approximately 17% for the yen,13.6% for the Deutschmark, and, remarkably, 8.6% for sterling. The governments agreed to hold the exchange rates within a range of 2.25% of the agreed parities.

In early 1973 there was a further exodus out of dollars and in February 1973 the dollar was devalued by 10% and the official price of gold raised to $42.22 per ounce. Pressure still continued on the dollar, as inflation was on the rise as well as the prospect of further devaluation. In late 1973 the Yom Kippur War and the sudden increase in the price of oil caused further turmoil in the markets. The subsequent spike in inflation and the recession of 1974/75 created such payment imbalances that a return to fixed parities was impossible.

This ushered in a system of floating exchange rates.