Letter: The strong pound

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The Independent Online
STERLING'S value against the German mark increased by 20 per cent between May 1996 and May 1997. It has since gone up a further 10 per cent but it is worth placing on record that the sterling time-bomb was a Conservative inheritance. I raised the issue regularly in the Commons only to be brushed away by Ken Clarke, who told me in March 1997: "We have a floating exchange rate at the moment and, for that reason, I do not control its level. Finance ministers do not control the level of exchange rates in today's deregulated foreign exchange markets."

His answer would cause smiles in the finance ministries of Europe, the United States or even Switzerland, where a mix of measures have been used by policy-makers to determine currency values. If Gavyn Davies is right (column, 30 March) and the Bank of England has "concluded that about seven- eighths of the [pound's] appreciation cannot be explained by monetary or other measurable factors" perhaps it is time the Bank hired economists for whom currency value is not an unfathomable mystery.

DENIS MacSHANE MP

(Rotherham, Lab)

House of Commons

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