IMMEDIATE
CYPHER/CAT A
GRF3 285
FM HONG KONG 270510Z
CONFIDENTIAL
مکاستا
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Z
3/x4
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CONFIDENTIAL
ORWELL
TAKK SLL...
TO IMMEDIATE F C O TELNO 1361 OF 27TH NOVEMBER, 1973.
YOUR TELEGRAM NUMBER 1209.
STERLING GUARANTEE.
WE
VALUATION USING OUR CONVENTIONAL BASIS WOULD JUST NOT BE
FEASIBLE FOR US BECAUSE THE EXCHANGE FUND'S ASSETS WILL BE REVALUED
AS AT 31ST DECEMBER AND THE GENERAL FUND'S AS AT 31ST MARCH. DID NOT MEAN TO SUGGEST IT WOULD BE FEASIBLE IN PARAGRAPH 2 OF OUR TELEGRAM 1317. WE WERE SIMPLY MAKING THE POINT THAT THERE
WAS NO STATUTORY BASIS.
2.
AS IT SEEMS MOST UNLIKELY THAT MARKET PRICES OF GILTS
WILL REGAIN THE PAST YEAR'S LOSSES DURING THE NEXT FEW MONTHS (1.E. DURING THE PERIOD OF THE GUARANTEE), THE BOCK VALUES
OF OUR HOLDINGS WILL BE CONSIDERABLY ERODED ON BOTH OF THESE DAYS.
THE SHORTFALL BETWEEN CONVENTIONAL BASIS VALUES AND MARKET VALUES
AS AT 26TH SEPTEMBER WAS POUNDS 35 MILLION (POUNDS 348 MILLION LESS
POUNDS 313 MILLION): AND CURRENTLY IS SUBSTANTIALLY MORE, VIZ:
AFTER ALLOWING FOR INTEREST CREDITS WE SHALL HAVE TO TOP UP BY
POUNDS 5 - 6 MILLION AT THE END OF NOVEMBER IN ORDER TO MAINTAIN
A POSITION FOR THE PURPOSES OF THE GUARANTEE OF POUNDS 313
MILLION. OBVIOUSLY, WE COULD NOT CONSIDER RESTORING OUR POSITION TO POUNDS 348 MILLION AND, THEREFORE, IN PARAGRAPH 3 OF OUR TELEGRAM 1317 WE GAVE YOU THE FIGURES WHICH WE CONSIDERED
SHOULD BE USED FOR THE PURPOSE OF CALCULATING OUR OPENING POSITION AS WELL AS BEING IN ACCORDANCE WITH PARAGRAPH 6(3)(B)
OF THE DECLARATION.
3. I SHOULD LIKE TO GO TO EXECUTIVE COUNCIL ON 4TH DECEMBER AND WOULD APPRECIATE, THEREFORE, A VERY EARLY REPLY SO THAT A MEMORANDUM
CAN BE FINALISED.
MACLEHOSE
ORWELL DISTRIBUTION
FRD HKIOD
CONFIDENTIAL
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