Suez and Sterling, 1956

Adam Klug and Gregor Smith

No 273755, Queen's Economics Department Working Papers from Queen's University - Department of Economics

Abstract: Daily data on spot and forward dollar/sterling exchange rates and on Britain’s foreign exchange reserves are used to reassess the financial history of the 1956 Suez crisis. We find that support of sterling at its Bretton Woods lower bound lost credibility as early as July. Reserve losses also are consistent with an exchange rate crisis. We provide the first econometric study of foreign exchange market intervention in the pre-convertibility phase of the Bretton Woods system. The Bank of England’s interventions reacted strongly both to official sterling and to the transferable sterling market in New York, which suggests that convertibility was a central goal of policy.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 1256
Date: 1999-02
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Journal Article: Suez and Sterling, 1956 (1999)
Working Paper: Suez And Sterling, 1956 (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:quedwp:273755

DOI: 10.22004/ag.econ.273755

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