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Sterling Exchange Rate

Volume 15: debated on Wednesday 16 December 1981

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asked the Chancellor of the Exchequer whether, in view of the effect on exports of a high value of sterling, he will ensure that the policy of Her Majesty's Government will be to allow the level of sterling to be determined freely by market forces.

The underlying movement of the exchange rate is determined by market forces. Whether the rate is rising or falling the Government's policy is for intervention in the foreign exchange market to be limited to that required to moderate excessive fluctuations and maintain orderly conditions. As my right hon. and learned Friend the Chancellor of the Exchequer made clear at the time of the Budget, the exchange rate is one of the range of factors taken into account in assessing monetary conditions and in setting interest rates.