end-January and the reduction in August were
both in response to similar action by the
Bundesbank, and the further rise in market rates
in February and March, which obliged the banks
to impose a surcharge, can also be attributed to
the relatively weak position of the guilder.
Surprisingly, the gap between German and
Dutch money market rates remained at more
than 1 following the rise in the discount rate in
January. The explanation for this can hardly lie
in macroeconomic factors - unless, of course,
the central bank sought thus to stress the
structurally strong position of the guilder
vis-a-vis the D-mark. Presumably the cause lay
elsewhere, notably in the perils which surround
ed the dollar. Firstly, because interventions
aimed at depressing the value of the dollar are
largely channelled via the Deutschmark, a fact
which not only tends to force up the value of the
Deutschmark with respect to the dollar, but also
its value against the guilder. Secondly, because,
partly due to the fact that the German money
n n n n
n n n
and capital markets are larger than the Dutch,
an autonomous shift away from the dollar is
mainly felt there and so leads to a relative
weakening of the guilder against the D-mark.
MONEY AND CAPITAL MARKET RATES
STATE BONDS NETHERLANDS THREE-MONTHS LOAN TO LOCAL AUTHORITIES NETHERLANDS
mm mm mm mm STATE BONDS WEST GERM ANY THREE-MONTHS INTERBANK LOANS WEST GERMANY
V
W-
1982
1980
1981
1979
1983
1985
1984
MONTHLYAVER
The port of Rotterdam, an important link in Holland's trade,
especially with Germany.
