§ 3. Mr. Wainwrightasked the Chancellor of the Exchequer what recent discussions he has had with his counterpart in the United States of America about concerted intervention in foreign exchange markets.
§ Mr. LawsonThese matters will no doubt be discussed at the ministreial meeting of the G10 in Tokyo, which I shall be attending.
§ Mr. WainwrightThere was a successful innovation of concerted intervention in the foreign exchange markets at the end of February. Will the Chancellor communicate some confidence to exporters and others by ensuring that plans for concerted intervention stand ready to be used as a weapon against undue turbulence in the foreign exchange markets?
§ Mr. LawsonThe role of concerted intervention is limited, but from time to time it can be useful. The hon. Gentleman was right to say that the concerted interventions in January and February were successful. Of course, that can be reactivated at any time that appears appropriate. The role of concerted intervention is relatively modest, although it can be and has been useful at times.
§ Mr. HigginsWill my right hon. Friend take steps at the G10 meeting to secure contingency arrangements to deal with the possible collapse of the dollar exchange rate, which could have most serious effects on United States interest rates, the debt crisis in South America and elsewhere and, indeed, the stability of the international system?
§ Mr. LawsonI listen carefully to my right hon. Friend, but I should have thought that a fall in the exchange rate of the dollar and of dollar interest rates would, on balance, be helpful to debtor countries in particular and to the world economy as a whole. As for contingency plans, every 1141 country, including the United Kingdom, bears in mind what might happen and has views on how it might react in such circumstances.