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To: Rob Hinton who wrote (39280)	8/19/1999 1:09:00 PM
From: Enigma	Respond to of 116912

UK Press: Ex-boe FX Head Says Bank Should Sell Stlg, Not Gold Aug. 19-MAR-- [B] UK Press: Ex-BOE FX head says bank should sell stlg, not gold By Bridge News London--Aug 19--The debate over whether the UK's monetary authorities should allow sterling to rise unchecked was reignited today by Terry Smeeton, the former head of the Bank of England's foreign exchange division. UK Chancellor of the Exchequer Gordon Brown should order the bank to be a "ready seller" of sterling at levels above 95 on its trade-weighted index, Smeeton said in a letter published in the Financial Times. * * * Sterling closed at 103.6 on its TWI Wednesday, so Smeeton clearly believes the currency should be forced down from its current levels. In his letter, Smeeton argued Brown should make use of the current strong fiscal position by allowing a funding requirement to arise through the sale of sterling. Selling sterling above 95 on the TWI "would have the effect of bringing the pound lower, thereby helping British industry. The sales of sterling should be funded by the issuance of long gilts, thereby helping maintain liquidity in the gilts market, an important objective for a leading financial center like London." Smeeton also argued that by selling sterling, and thus boosting foreign exchange reserves, the bank would not have to go through with its controversial gold sales. "The...rise in foreign exchange reserves...would have the consequence of reducing the proportion of gold held, destroying any case for gold sales and thereby helping the producing countries." In his few public comments on FX intervention, however, Brown has consistently opposed the idea and the bank has yet to intervene to push sterling lower under the current government. End Bridge News, Tel: +44-171-842-4079 Send comments to Internet address: gennews@bridge.com For a complete list of regular UK economic releases covered by Bridge News see story .5563 Link to the Bank of England website: bankofengland.co.uk Link to the Treasury website: hm-treasury.gov.uk The Bridge ID for this story is YZLFBJ (c) Copyright 1999 FWN