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Sterling in crisis, 1964–1967

Published online by Cambridge University Press:  03 December 2009

MICHAEL D. BORDO ,
RONALD MACDONALD  and
MICHAEL J. OLIVER
MICHAEL D. BORDO
Affiliation:
Department of Economics, Rutgers University, New Jersey Hall, 75 Hamilton Street, New Brunswick, NJ 08901, USA, [email protected]
RONALD MACDONALD
Affiliation:
Department of Economics, University of Glasgow, Glasgow, G12 8RT, UK, [email protected]
MICHAEL J. OLIVER
Affiliation:
ESC Rennes School of Business, 2 rue Robert d'Arbrissel, 30333365 Rennes, CEDEX, France, [email protected]
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Abstract

We provide the first econometric study of foreign exchange market intervention for the UK during the sterling crises from 1964 from 1967. We use daily data on spot and forward dollar/sterling exchange rates and reserve movements which allows a more precise description of the loss of credibility during four currency crises. Reserve losses are consistent with exchange rate crises. External assistance given to sterling throughout this period shored up the reserves and allowed the sterling peg to be maintained.

Type
Research Article
Information
European Review of Economic History , Volume 13 , Issue 3: Foreign Exchange Reserves and the International Monetary System , December 2009 , pp. 437 - 459
Copyright
Copyright © European Historical Economics Society 2009

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