HC Deb 11 July 1994 vol 246 cc378-9W
Mr. Austin Mitchell

To ask the Chancellor of the Exchequer (1) what are the reasons for supporting and participating in recent central bank intervention to support the United States dollar; and what effect this has had on interest rates;

(2) to what extent the United Kingdom Exchequer is bearing the exchange rate risk of Bank of England intervention to stop the foreign exchange value of the United States dollar from falling;

(3) what consideration Her Majesty's Government give to the balance of payments in deciding whether to intervene in the foreign exchange market to support the United States dollar;

(4) whether he will publish the evidence he has on whether (a) the yen is overvalued and (b) the United States dollar is undervalued;

(5) what United Kingdom economic interest is served by the Bank of England's recent participation in central bank intervention to support the United States dollar at the current rate of exchange.

Mr. Nelson

The Bank of England participated in concerted intervention in support of the dollar on 4 May and 24 June 1994, on behalf of the United Kingdom Government. The concerted intervention reflected a concern shared with other Governments about recent developments in international financial markets. The Government consider greater exchange rate and capital market stability to be in the United Kingdom's interests. There are a large number of factors which may have influenced recent dollar and yen exchange rates. The intervention was undertaken to steady market conditions.