238
HKK
1943
SECRET
THE EFFECT ON THE VALUATION OF OUR HOLDINGS OF GILT EDGED
SECURITIES. IN THIS CONNECTION, IT LOOKS AS IF WE WOULD NEED TO
BUY ABOUT £5 MN. AFTER ALLOWING FOR INTEREST ACCRUALS IN MAH.
ARE YOU NOW SUGGESTING IN. PARAGRAPH 3 OF YOUR TELEGRAM UNDER
REFERENCE THAT THERE IS NO POINT IN OUR DOING THIS? AND ARE YOU
ALSO SUGGESTING THAT INTEREST ACCRUALS DURING MARCH WILL NOT BE
COUNTED AS PART OF OUR ELIGIBLE STERLING BALANCES?
3. OF COURSE, IF THE GILT EDGED MARKET WEAKENED ON FRIDAY 29TH MARCH, THE LAST WORKING DAY OF THE MONTH, WE WOULD STILL BE TECHNICALLY IN BREACH, BUT THERE IS NO WAY WE COULD AVOID THIS
EXCEPT BY MORE THAN TOPPING UP. BUT IT IS ANYONE'S GUESS BY HOW MUCH WE SHOULD MORE THAN TOP UP: AND OUR OBLIGATION TO TOP UP
AT ALL, SIMPLY BECAUSE WE ARE HEAVILY INVESTED IN THE LONG END OF THE GILT EDGED MARKET, WAS GREATLY CRITICISED IN EXECUTIVE COUNCIL (SEE PARAGRAPH 1 OF OUR TELEGRAM 1433 OF 11 DECEMBER
1973). AS IT IS, UNOFFICIALS ARE GOING TO BE DISTINCTLY TAKEN ABACK TO LEARN THAT WE HAVE ALREADY HAD TO BUY SOME £1ЄMN FOR
TOPPING UP PURPOSES BUT THAT, OF COURSE, IS OUR WORRY, NOT YOURS.
INCIDENTALLY, IF YOU DECIDE TO COMPENSATE US ON OUR ACTUAL
HOLDINGS AT THE CLOSE OF BUSINESS ON 29TH MARCH IF BELOW £313MN.,
SO BE IT, BUT REALLY DO NOT SEE HOW YOU CAN POSSIBLY CLAIM
THAT TO COMPENSATE US AT ALL IS A CONCESSION''.
4. AS WE MUST KNOW WHETHER IT IS WORTH OUR WHILE BUYING STERLING BEFORE FRIDAY TO TRY TO GET OUR POSITION STRAIGHT AS AT THE END OF THE LAST WORKING DAY OF THIS THE LAST MONTH OF THE PRESENT GUARANTEE (WITHOUT PREJUDICE TO OUR INTERPRETATION OF THE TOPPING, UP PROCESS), I SHOULD BE MOST GRATEFUL FOR A REPLY TO THIS TELEGRAM BY FIRST THING ON THURSDAY HONG KONG TIME.
MACLEHOSE
ORWELL DISTRIBUTION
FRD
HKIOD
2 SECRET