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zulchzulu SEES NO CHANGE IN MONETARY COURSE The Bundesbank sees no current reason to change monetary course , vice - president Helmut Schlesinger told Reuters in a telephone interview . Schlesinger was responding to questions following remarks yesterday by Bundesbank board member Claus Koehler and West Berlin state central bank president Dieter Hiss , which , dealers said , revived some speculation that German interest rate cuts may once again be under discussion . Schlesinger said he had no comment on the remarks of his two central bank council colleagues . But he added that the last central bank council meeting on April 2 had discussed the economic situation with a mood of " subdued optimism zulchzulu particularly influenced by the news brought by several state central bank presidents . " Much is going better than the impression gained by the public from the January figures , which have been in the meantime superseded zulchzulu he said . German January industrial output fell 3 . 0 pct after a decline of 0 . 9 pct in December . New industry orders fell 1 . 9 pct after they had been unchanged in December . Bank economists said that the two together showed the economy would either stagnate or contract in the first quarter of 1987 . Aside from the economic developments , Schlesinger added , a steady monetary course was important to hold the dollar / mark rate around current levels as Bundesbank president Karl Otto Poehl had said while attending the Washington World Bank / IMF meeting . Asked , however , if the Bundesbank could move to cut rates on repurchase agreements at the setting of the next repurchase tender , due next Tuesday , Schlesinger said , " Since the central bank council gives its opinion on this theme only every 14 days , this is hardly probable zulchzulu Responding to the question whether the Bundesbank had moved away from a policy of targetting monetary growth toward one of targetting currency rates , Schlesinger said he could have no comment on the subject while negotiations were still

U . K . RESERVES LIFT HOPES OF FURTHER BASE RATE CUT The record 4 . 9 billion dlrs rise in U . K . Reserves in May to a total 34 . 7 billion has lifted hopes for a further cut in bank base lending rates after the June 11 general election , market analysts said . Sterling would have risen on the much better than expected number but for market nerves about the poll outcome , they said . But the weight of foreign currency and gold reserves now available to the authorities to support the pound should curb any market tendency to panic if U . K . Opinion polls show the ruling Conservative Party ' s lead slipping , they added . " We have been intervening to a very much greater extent than we have done hitherto zulchzulu Chancellor of the Exchequer Nigel Lawson said at a news conference today , commenting on the news of the record reserves rise . He put the U . K . Intervention in the context of the Louvre accord between leading industrial nations to stabilise the dollar , partly through direct intervention on foreign exchanges . " We have been playing a very full part ourselves zulchzulu he said . But market analysts see the recent upward pressure on sterling , and consequent need for official sales to damp down its rise , more in the light of local factors . Steven Bell , chief economist at Morgan Grenfell Securities , said that corporate money has been flowing back into Britain amid hopes of another Conservative government , after fears last autumn of a Labour election victory sent it flooding out . U . K . Portfolio investment is also returning , while foreign buyers see U . K . Growth propects and high bond yields as attractive . They will be strong buyers of U . K . Assets , notably equities , once the election is out of the way , Bell said . Analysts see this pressure as the main hope for lower interest rates

FED EXPECTED TO ADD RESERVES VIA CUSTOMER RPS The Federal Reserve is expected to enter the government securities market to add reserves via customer repurchase agreements , economists said . They expected the amount to total around 1 . 5 billion to two billion dlrs . Economists added that the low rate on federal funds indicates the Fed is unlikely to add funds agressively through overnight system repurchases , unless it feels the need to calm volatile financial markets . Federal funds were trading at 7 - 1 / 8 pct , down from yesterday ' s average of 7 . 61 pct .

INDIA RELAXES RULES FOR EXPORT PROMOTION The Reserve Bank of India , RBI , announced new rules to allow exporters of 25 products to use foreign exchange up to 10 pct of their firm ' s total annual export earnings for export promotion abroad . The move is designed by the government to improve India ' s trade deficit . Products eligible for the new Blanket Exchange Permit Scheme include tea bags , cigarettes , coffee , leather , various textiles , chemicals , pharmaceuticals , plastics , engineering and electronic goods , ready - made garments , processed food , sports goods , fabricated mica and consultancy services . The scheme replaces current rules which allow different amounts of foreign exchange to be used only when firms attain a minimum annual turnover prescribed for each product . RBI said under the new rule , 16 other products will qualify , on a discretionary basis , for overseas promotional spending of not more than two pct of the freight - on - board value of annual export earnings . These include oil cakes , cereals , raw cotton , raw and semi - processed leather , gems , castor and sandalwood oil , psyllium husks and seeds , opium and various mineral ores . RBI said exporters of products not covered by either of the two groups will be eligible to use up to five pct of their freight - on - board value of their annual export earnings . Industry sources said the new entitlements , considerably higher than the previous limits , are also more flexible because holders of new permits no longer need to frequently apply to RBI for release of foreign exchange for export purposes .

G - 7 ISSUES STATEMENT AFTER MEETING Following is the text of a statement by the Group of Seven -- the U . S zulchzulu Japan , West Germany , France , Britain , Italy and Canada -- issued after a Washington meeting yesterday . 1 . The finance ministers and central bank governors of seven major industrial countries met today . They continued the process of multilateral surveillance of their economies pursuant to the arrangements for strengthened economic policy coordination agreed at the 1986 Tokyo summit of their heads of state or government . The managing director of the International Monetary Fund also participated in the meeting . 2 . The ministers and governors reaffirmed the commitment to the cooperative approach agreed at the recent Paris meeting , and noted the progress achieved in implementing the undertakings embodied in the Louvre Agreement . They agreed , however , that further actions will be essential to resist rising protectionist pressures , sustain global economic expansion , and reduce trade imbalances . In this connection they welcomed the proposals just announced by the governing Liberal Democratic Party in Japan for extraordinary and urgent measures to stimulate Japan ' s economy through early implementation of a large supplementary budget exceeding those of previous years , as well as unprecedented front - end loading of public works expenditures . The government of Japan reaffirmed its intention to further open up its domestic markets to foreign goods and services . 3 . The ministers and governors reaffirmed the view that around current levels their currencies are within ranges broadly consistent with economic fundamentals and the basic policy intentions outlined at the Louvre meeting . In that connection they welcomed the strong implementation of the Louvre Agreement . They concluded that present and prospective progress in implementing the policy undertakings at the Louvre and in this statement provided a basis for continuing close cooperation to foster the stability of exchange rates .

JAPANESE TARIFFS SEEN AS WORLDWIDE WARNING The tough trade sanctions President Reagan imposed on Japanese exports are not only a shot across Japan ' s bow but also a sign Reagan will attack unfair trade practices worldwide , U . S . officials said . But Robert Crandall , a trade specialist at Brookings Institution , a think tank , said " a shot across their bow can often result in a shot in our stern zulchzulu He said it left the United States open to retaliation . The U . S . officials said the 100 pct tariffs Reagan ordered on 300 mln dlrs worth of Japanese goods will also show Congress that a tough pro - trade stand can be taken under existing laws , and no new protectionist legislation is needed . In the past year tough trade action had been taken against the European Community over corn and sorghum , Taiwan over beer and wine , South Korea over counterfeiting of copyrights , patents and zulchzulu and Japan on tobacco . White House spokesman Marlin Fitzwater told reporters the tariffs - up from five pct - should be seen as a " serious signal " to other nations on the need for fair trade practices . Reagan said he imposed the sanctions on certain computers , television sets and some hand tools because Japan did not honor an agreement to end dumping semiconductors in world markets at less than cost and to open its markets to U . S . products . The tariffs were placed on items which were available from other sources so there would be little effect on the American consumer , Fitzwater said . Reagan has come under heavy pressure to take tougher action - especially against Japan - to end global unfair trade practices and reverse the growing U . S . trade deficit . The alternative was that if he did not , Congress would . The U . S . trade gap last year was a record 169 . 8 billion dlrs , and continues to rise , with

U . S . TAKES TOUGH STAND ON GATT FARM ISSUES The United States is prepared to " pull out all the stops " to defend its agricultural trade rights under the General Agreement on Tariffs and Trade ( GATT zulchzulu U . S . Ambassador to GATT Michael Samuels said . Those rights are now being challenged by the European Community ' s ( EC ) agricultural support policies , he told a conference sponsored by the American Soybean Association . He reiterated Washington ' s firm intention to retaliate if the EC goes ahead and bans imports of hormone - fed beef without the issue being investigated by a GATT special committee . The U . S . claims the EC directive , due to come into effect on January 1 , threatens to cut 100 mln dlrs worth of U . S . meat shipments into the EC . The U . S . also will oppose all EC efforts to impair U . S . trade via the EC oilseeds regime , which supports EC oilseed prices over the current market level and which may be extended to include a hotly disputed oils and fats tax , Samuels said . Reduction of trade - distorting world agricultural subsidies , an aim of most key participants in GATT multilateral trade negotiations , " is meaningless if import barriers continue to be erected zulchzulu Samuels said . Samuels called the U . S . plan to eliminate world farm subsidies by the year 2000 , proposed at GATT in July , " visionary " and " very serious zulchzulu The EC and Japan have said it is unrealistic . The EC Commission this month announced its draft proposal on farm trade reform , expected to be tabled at GATT formally next week . The EC scheme involves emergency measures to reduce tensions in troubled surplus sectors of cereals and cereals substitutes , dairy and sugar . It also calls for reduction of farm subsidies . The U . S . Is not opposed to short - term measures

ASA SAYS EC zulchzulu POLICY ILLEGAL UNDER GATT The American Soybean Association ( ASA ) denounced European Community ( EC ) oilseed policies as illegal under the General Agreement on Tariffs and Trade , and threatened to make an unfair trade complaint if the EC does not remedy the situation . ASA Vice President James Adams told an ASA - sponsored Outlook 87 conference : " It will be filed unless the EC takes drastic and immediate steps zulchzulu " These subsidies are blatantly unfair and are GATT illegal , since they were established after the zero soybean duty was established in 1962 zulchzulu he said . The ASA ' s unfair trade petition against the EC would ask for an investigation and modification of EC oilseed policies to make the regime non - discriminatory . The EC in 1962 ruled all EC oilseed imports duty - free , in an effort to fill its oilseed needs . But EC oilseeds production has risen dramatically since then . The EC now guarantees oilseed prices to farmers above world market levels and is considering implementing a controversial oils and fats tax . The subsidies " are obvious attempts to circumvent the zero duty binding and that makes U . S . Farmers mad as hell zulchzulu Adams said . The ASA is confident the U . S . Congress will support its trade complaint , Adams said . The ASA also strongly opposes an EC proposal to tax vegetable and marine oils consumed in the EC , which will be considered by the EC Commission in December . U . S . Soybean world market share has declined 35 pct in volume and 40 pct in value since 1982 , primarily as a result of EC policies , Adams added . Lord Plumb , European Parliament President and a speaker at the conference , said the EC expanded oilseed production in 1973 when the U . S . Halted overseas sales of soy products .

zulchzulu DEFENDS U . S . EXPORT SUBSIDY PROGRAM U . S . Agriculture Secretary Richard Lyng said the United States will continue its policy of subsidizing farm exports to regain lost markets until there is a global agreement to end such subsidies . In an interview with Reuters , Lyng also acknowledged he was troubled by the prospect that the export enhancement program ( EEP ) could prove so indispensable to boosting U . S . exports that the U . S . would have difficulty abandoning it . " Yes , I ' m troubled with that a little bit zulchzulu he said . " There ' s no question about it , the longer you feed the calf on the cow , the longer it is to wean it zulchzulu In recent months , USDA has offered subsidies on a growing list of commodities to an increasing number of countries . Lyng called U . S . and European Community export subsidies " just plain nonsensical as a long - term policy " and said he saw an end to the expansion of the EEP . " I ' m sure there ' s an end to the expansion , but we are doing this to accomplish our goal which is to regain the markets that we ' ve lost , to keep our products competitive and to let those , particularly the European Community , who , we are convinced , are the worst offenders in terms of the export subsidization , that we are prepared to continue to do this until we can come to some agreement to put an end to it zulchzulu he said .

GERMAN BANKERS ' REMARKS REVIVE TALK OF RATE CUT Remarks by two leading central bankers sparked renewed speculation in financial markets that a cut in the West German three pct discount rate may be under discussion , currency dealers said . Bundesbank board member Claus Koehler said in a speech that monetary growth resulting from speculative capital inflows required cuts in interest rates . Separately , West Berlin state central bank president Dieter Hiss told journalists that the discount rate could fall below its lowest ever point of 2 . 75 pct . He made clear that he was not making a forecast on interest rates , however . Currency dealers here and in the Far East said the dollar gained slight background support from the speculation . But German dealers noted that the Bundesbank kept the 3 . 80 pct rate unchanged at which it offered liquidity to the money market this week , dashing some expectations that it may either offer lower fixed rate money or offer a reduced minimum rate and let the strength of banks ' demands set the allocation rate . It allocated 6 . 1 billion marks in new liquidity , much less than the 14 . 9 billion leaving the market as a prior pact expired . This further weakened sentiment the Bundesbank could move to a more accommodative monetary stance , dealers said . Koehler said in a speech in Surrey , England , speculative capital inflows may cause monetary growth , regardless of whether central banks intervened or exchange rates fell . " In other words , the monetary policy measures required are different from -- and sometimes diametrically opposed to -- those needed when the money stock is increasing as a result of mounting economic activity zulchzulu Though Koehler was known to be the most liberal of the generally monetarist Bundesbank board , his comments marked the first time cuts in rates had been concretely suggested as a counterpoint to overly strong monetary growth , dealers said . REUTER ^ M

SOVIETS OUTLINE 1988 ECONOMIC TARGETS The Soviet Union outlined its economic targets for 1988 on Monday , stressing the need to improve standards in the country ' s sluggish engineering industry . Planning chief Nikolai zulchzulu told the Supreme Soviet industrial output should rise by 4 . 5 pct in 1988 , up from a planned 4 . 4 pct in 1987 . It rose 3 . 6 pct in Jan - Sept 1987 . zulchzulu said national income , the nearest Soviet equivalent to gross national product , should rise by 4 . 3 pct against a planned 4 . 1 pct this year . Gross national product measures the output of a country ' s goods and services . He said the Kremlin planned to produce 235 mln tonnes of grain in 1988 versus a planned 232 mln this year . Moscow produced 210 mln tonnes in 1986 . Kremlin leader Mikhail Gorbachev has described machine - builing as a sector whose rapid modernization is essential if the Soviet Union is to compete effectively on world markets . " Certain difficulties have arisen this year in the machine - building industry . The economy is not receiving a considerable amount of the equipment that it requires zulchzulu said zulchzulu , who heads the state planning committee zulchzulu . Soviet data show the machine - building industry , which makes machine tools , instruments and other engineering goods , increased output by 3 . 3 pct in the first nine months of 1987 compared with the same period last year . However , this was far below the 7 . 3 pct increase planned for the industry for the whole of 1988 . zulchzulu said the ruling Politburo had concluded at a recent meeting that an improvement in economic performance depended to a large extent on conserving resources better . " Large - scale measures are planned to save resources zulchzulu he said . Finance Minister Boris Gostev told the Supreme Soviet that defense spending in 1988 would total 32 billion dlrs , the same figure as was announced

U . S . SENATE TEAM WANTS MULTINATIONAL GULF FORCE The leaders of a U . S . Senate team probing American defense strategy in the MidEast Gulf said they favored a multinational force to keep oil flowing through the waterway . Sen . John Glenn and John Warner , in Kuwait as part of a Gulf Arab tour , said at a news conference that top officials in the area appeared ready to discuss extra facilities needed if the U . S . upgraded its defense role . The Senate team next heads for the United Arab Emirates , their last stop on a fact - finding mission prompted by Reagan administration plans to let half of Kuwait ' s 22 - tanker fleet fly the U . S . flag . Glenn and Warner said the U . S zulchzulu Britain and France , should explore the possibility of a unified Gulf force . " The American ships , the British ships , the French ships now talk to each other and all we ' ve got to do is formalize this arrangement zulchzulu Warner said . Glenn said a multinational force could be effectively deployed within 24 hours of a decision . Glenn voiced a preference for a United Nations multinational force , or failing that , an American , British , French force with cooperation from the Gulf Arab states . Warner voiced concern that the Soviet Union might use the situation in the Gulf to raise its presence . " And , unequivocally , all GCC states we have talked with , have said that would not be in the interests of the Arabian peninsula zulchzulu

ITALY DEFICIT NOT DUE TO LIBERALIZATION - MINISTER Italy ' s Foreign Trade Minister Mario zulchzulu , commenting on speculation in the Italian press , said a sharp balance of payments deficit in May could not be attributed to recent moves liberalizing the purchase of foreign securities . zulchzulu was reacting to suggestions that last month ' s overall 3 , 211 billion lire deficit , which compares with April ' s 2 , 040 billion surplus , could be linked to a May 13 decree abolishing obligatory non - interest - bearing deposits on foreign securities purchases . " The deficit can be better attributed to premature and delayed foreign trade payments and receipts ( leads and lags ) rather than capital outflow to portfolio investment zulchzulu zulchzulu said in a statement . Earlier today the newspaper La Repubblica cited remarks by the Bank of Italy , which announced the deficit for May and said it had been partly caused by " non - banking capital outflows zulchzulu " In practice , it seems that there has been a constant flow of capital to foreign securities or investments outside our borders zulchzulu said the newspaper . But the newspaper added that it was still not possible to say how far the move to abolish foreign securities purchase deposits had affected Italy ' s balance of payments .

zulchzulu WARNS AGAINST FURTHER DOLLAR FALL Bundesbank President Karl Otto Poehl said a weaker dollar would be risky and a further appreciation of the mark would damage prospects for sustained West German economic growth . In a speech to the Institute of Contempory German Affairs here , Poehl said " It would be an extremely risky policy to aim for a further substantial decline in the value of the dollar to correct the trade deficit zulchzulu He said the United States could face a vicious circle of depreciation , inflation and more depreciation if it took that route . Poehl noted West Germany had already taken steps to meet U . S . Demands for greater stimulation of its domestic economy , accelerating tax cuts , cutting interest rates and tolerating above - target money supply growth . He said he would have been happy to have brought forward five billion marks of tax cuts now planned for January 1988 to the beginning of this year , but he said the government faced political constraints getting such measures through the upper house of the West German parliament . But there were also limits to the impact West Germany could accept on exports from a rising mark , he said . Poehl said West Germany relied on exports for about one - third of its gross national product , so a substantial erosion of export markets could not be offset by increasing demand at home . " A further appreciation of the mark could even be an obstacle to further growth zulchzulu he said . Poehl said the Bundesbank had tolerated rapid money supply growth last year because the country enjoyed low inflation and because external factors , including low oil prices and favourable terms of trade , had given some extra leeway . But Poehl said West Germany now faced a difficult dilemma over monetary policy . The underlying rate of inflation was now two pct , not the reported negative inflation rates last year , and West Germany was affected more than before by exchange rate developments . "

zulchzulu REMAINS INTACT FOR DEBT FUTURES The six basis point rise of the past month in U . S . debt futures may be extended next week by a series of U . S . economic reports , analysts said , as long as the dollar holds firm . " Interest rates have declined by approximately 50 basis points over the last month , largely over indications that inflation is not as high as people had feared and the narrowing U . S . trade balance , in nominal terms zulchzulu Samuel Kahan , chief financial economist with Kleinwort Benson Government Securities , said . Kahan said recent government reports have shown strength in the economy during the first quarter , but his concern is whether the U . S . economy will sustain that strength in the longer term . Weak U . S . economic growth could hurt the dollar , which has become more important to the direction of debt futures than the beneficial impact on interest rates of a sluggish economy . The median trade expectations for Tuesday ' s U . S . Consumer Price Index and Durable Goods reports are up 0 . 4 pct and down 1 . 5 pct , respectively . Meanwhile , the eight billion dlr drop in the M - 1 money supply announced this week was " surprising , much larger than expected zulchzulu according to Kahan . " Unless quickly reversed zulchzulu such a trend " will ensure that June M - 1 growth will be negative zulchzulu Kahan said . Taken in conjunction with M - 2 and M - 3 aggregates which Kahan said have " slowed to a crawl , below Federal Reserve Board annual targets zulchzulu the consequences could be a hint of economic weakness down the road , he said . Based on chart formations , T - bond futures may be poised for further gains , although the advance has been slowed recently , analysts said . September T - bonds " are up almost six points since about May 18

KUWAITI DINAR RATES FIRM , AID WINDOW OPEN Interest rates on Kuwaiti dinar deposits held firm in scattered trading despite a Central Bank decision to revive limited funding lines , dealers said . The Central Bank , which last Tuesday shut a daily aid window through which it lent funds of up to one year , reopened the facility for three month money , which was available at seven pct , they said . It offered one month funds at seven pct through swap facilities , dealers said . Today ' s Central Bank action , combined with sales of dollars by some banks , helped ease a recent credit squeeze engineered by the monetary authority to stem a rush for the U . S . Currency arising from attractive U . S . Interest rates and Gulf tension , dealers said . However , as one dealer noted : " The market is still unsettled zulchzulu Overnight funds , bid at 20 pct at the outset of business , traded up to 30 pct before easing as liquidity dragged offers down to 10 pct by the close . Tomorrow - next , for which buy / sell quotes started at 30 , 20 pct , ended at 14 , eight . Spot - next was indicated at 8 - 1 / 2 , seven after opening bids of 10 . Dealers quoted one - week at eight , seven against an early 9 - 1 / 2 , 7 - 1 / 2 . One month rates were at the same level after trade at eight then 8 - 1 / 2 . Dealers quoted three months at seven , 6 - 3 / 4 pct and six - month to one year funds at seven , six pct . They reported offshore offers of overnight at 10 , tomorrow - next at eight and one year at 6 - 1 / 2 pct towards the close . The Central Bank fixed its dinar exchange rate steady at 0 . zulchzulu / 67 to the dollar , against yesterday

SENATOR URGES ACTION TO STABILIZE STOCK MARKETS Sen . John Heinz , R - Pa , urged the Administration to take steps to reduce volatility in the financial markets , including suspending program trading and limiting daily trading on stock index futures . Heinz said margin requirements for index futures , now six pct , should be the same as for common stock and equities . He urged creation of a task force to be headed by former Federal Reserve chairman Paul Volcker to coordinate international credit and zulchzulu policies among major nations and stabilize interest rates at the lowest possible levels .

SAUDI RATES RISE AS BAHRAIN BANKS CAUGHT SHORT Saudi riyal interest rates rose as Bahrain - based banks scrambled to cover short positions , dealers said . Several Bahrain banks had been lending in the fixed periods and borrowing in the short dates , but today they found the day - to - day money in short supply , dealers said . " Everybody ' s stuck in the spot - next zulchzulu one trader said . Spot - next rose to as high as 6 - 1 / 4 , six pct from 5 - 1 / 4 , five pct yesterday , and the borrowing interest spilled over into the periods , with one month rising to around 6 - 3 / 16 , 5 - 15 / 16 pct from 5 - 15 / 16 , 7 / 8 pct yesterday . Three months edged up to around 6 - 9 / 16 , 5 / 16 pct from 6 - 7 / 16 , 1 / 4 pct , while six months was quoted a touch firmer by some banks at seven , 6 - 3 / 4 pct . Commercial banks quoted the spot riyal at 3 . 7500 / 04 to the dollar after 3 . 7507 / 09 yesterday .

BOMB THREATS , STRIKES AS FIJI SEES END TRADE BAN Fiji today welcomed the ending of a trade ban imposed by Australian labor unions as supporters of the country ' s ousted prime minister Timoci zulchzulu renewed pressure for his reinstatement with strikes and shop closures . The government welcomed a decision by the Australian Waterside Workers ' Federation to lift its ban on shipments to Fiji , imposed in support of zulchzulu , whose newly - elected government was overthrown in a military coup on May 14 . The ban had threatened food shortages of imported wheat , fresh vegetables and medicines . A direct result of the union decision would be the immediate shipment of 9 , 000 tons of rice and wheat from an Australian port , the government said . Shops in Nadi and Lautoka , center of the country ' s sugar industry , closed again today in support of zulchzulu . In Nadi two bomb threats forced evacuation of the Australian Westpac bank , but police said they turned out to be a hoax . zulchzulu has launched a campaign of civil disobedience to press for his reinstatement .

FED SEEN ADDING RESERVES VIA SYSTEM REPOS The Federal Reserve is expected to enter the government securities market to supply reserves to the banking system via system repurchase agreements , economists said . Most economists said the Fed would execute three - day system repurchases to meet a substantial need to add reserves in the current maintenance period , although some said a more aggressive add via overnight system repos was possible . Federal funds opened at 7 - 5 / 8 pct and remained at that level late this morning , compared with an average effective rate of 7 . 55 pct Friday .

ZAMBIA CUTS PRICES AS TROOPS PATROL zulchzulu The Zambian government today announced minor price cuts for essential commodities as part of its new economic strategy , while police and troops patrolled the northern Copperbelt to prevent any outbreaks of rioting . However , staple foods , such as bread , sugar and maize meal , were not affected by the cuts and many people said this could provoke trouble from disgruntled elements who had expected more sweeping reductions . Observers in the capital expressed disillusionment with the small extent of the price cuts , which ranged up to 10 pct on items such as blankets , soap , detergents and baby food . Residents in the Copperbelt contacted by telephone said government forces had set up roadblocks around the main towns . In Lusaka , business went on as usual and there was no sign of troops or police reinforcements on the streets . President Kaunda had ordered the price reductions to take account of lower import costs following the revaluation of the kwacha to a fixed rate of eight per dlr from 21 on May 1 . The revaluation formed part of a new go - it - alone economic strategy which Kaunda adopted to replace Zambia ' s IMF austerity program . Labour leaders in the Copperbelt said last week gangs of unemployed youths were being formed in the politically volatile region to take action against shops that did not reduce their prices after today ' s deadline . Fifteen people were killed in the Copperbelt during food riots last December after the government tried to lift maize subsidies .

PAPER SAYS U . S . TRADE DEFICIT CUT TO 13 . 65 BILLION The Washington Post said the U . S . Commerce Department yesterday issued a new report showing that the U . S . Merchandise trade deficit was 13 . 65 billion dollars in February , a reduction of 1 . 4 billion dlrs from the 15 . 06 billion figure the department reported only two days earlier . The newspaper said : " News of the unexpectedly large 15 billion deficit helped batter the dollar ' s value on foreign exchange markets and boosted U . S . Interest rates . " However , the new report went largely unnoticed by financial markets since such a downward revision in the deficit is a monthly occurrence zulchzulu The Washington Post said : " By law , the department must first publish what a top commerce official agreed are misleading trade figures and then wait 48 hours before putting out the more accurate ones zulchzulu No one was immediately available at the Commerce Department for comment on the Washington Post report .

U . K . MONEY MARKET GETS 103 MLN STG HELP The Bank of England said it operated in the money market this morning , buying 103 mln stg bank bills . The central bank bought in band one 60 mln stg at 9 - 7 / 8 , in band two eight mln at 9 - 13 / 16 , in band three 26 mln at 9 - 3 / 4 and in band four nine mln stg at 9 - 11 / 16 pct . This compares with the bank ' s forecast of a 400 mln stg shortfall today .

JAPAN ' S JUNE INTERIM TRADE SURPLUS NARROWS Japan ' s custom - cleared trade surplus narrowed to 1 . 61 billion dlrs in the first 10 days of June from 1 . 97 billion a year earlier , the Finance Ministry said . The June interim surplus compares with a 1 . 76 billion dlr surplus in the same May period . FOB exports in the first 10 days of June rose 17 . 6 pct from a year earlier to 6 . 05 billion dlrs while CIF imports rose 39 . 6 pct to 4 . 44 billion . The average yen / dollar rate used for the figures was 141 . 04 yen against 169 . 03 a year earlier .

ITALIAN BALANCE OF PAYMENTS IN DEFICIT IN MAY Italy ' s overall balance of payments showed a deficit of 3 , 211 billion lire in May compared with a surplus of 2 , 040 billion in April , provisional Bank of Italy figures show . The May deficit compares with a surplus of 1 , 555 billion lire in the corresponding month of 1986 . For the first five months of 1987 , the overall balance of payments showed a surplus of 299 billion lire against a deficit of 2 , 854 billion in the corresponding 1986 period .

U . S . DOLLAR LOSSES PROPEL BROAD COMMODITY GAINS Commodities from gold to grains to cotton posted solid gains in a flurry of buying today as losses in the U . S . dollar and rising interest rates kindled fears of inflation and economic instability . Gains were most pronounced on the Commodity Exchange in New York , where gold jumped 12 . 40 dlrs and closed at 436 . 50 dlrs a troy ounce , and silver 22 . 5 cents to 6 . 86 dlrs a troy ounce . A key factor behind the advance was anticipation that inflation will be the only way for the major industrial nations to halt the slide in the value of the U . S . dollar , said Steve zulchzulu , director of commodity research with Smith Barney , Harris Upham and Co zulchzulu in New York . The dollar tumbled one day after top finance officials from the seven largest industrial nations reaffirmed their commitment to support its value , and despite reports of intervention by the U . S . Federal Reserve Bank , traders said . Traders said it appears that the industrial nations , known as the Group of Seven , lack the ability to change the long - term direction of the currency markets . " Maybe they have some ideas or plans zulchzulu said zulchzulu . " If they do , it ' s not evident zulchzulu " It looks like there ' s no cure but to let the free market take values to where they should be . " One way or another , we will force our major trading partners to stimulate their economies zulchzulu as a measure to correct the mounting U . S . trade deficit , zulchzulu said . " I think the markets believe , and have believed for a long time , that the only recourse is to reflate at some point . It ' s going to be a long and tedious process , but that ' s what ' s happening zulchzulu he said

GERMAN BANKER CALLS FOR SPECIAL MONETARY MEETING Finance ministers from major industrial nations should hold a special meeting to deal with the U . S . Dollar ' s sharp decline , Helmut Geiger , president of the West German savings bank association , said . Geiger told Reuters : " Finance ministers should meet soon to take confidence - building measures to limit the damage caused by the dollar ' s fall zulchzulu Separately , Geiger told Bild newspaper in an interview released ahead of publication on Tuesday that the lower dollar , which had been artificially talked down by U . S . officials , would damage West German exports and cost jobs .

U . S . HOUSE PANEL VOTES TO SPEED UP CORN PAYMENTS The House Agriculture Committee voted to make approximately 2 . 8 billion dlrs of zulchzulu deficiency payments immediately instead of in the late fall . A similar measure was decisively defeated on the Senate floor last week . The bill , which passed by a voice vote , would allow so - called Findley payments to be made immediately rather than late this year . Payments for 1987 - 90 zulchzulu crops would not be changed . Because the bill would move 2 . 8 billion dlrs of spending into fiscal 1987 from fiscal 1988 , the measure is expected to meet stiff resistance in the full House .

zulchzulu SAYS CRITICISM NOT " ONE - WAY STREET " Finance Minister Gerhard Stoltenberg said he was surprised by recent criticism of West German economic policies voiced by U . S . Treasury Secretary James Baker but added that the criticism was not purely one - sided . Stoltenberg told the West German Trade and Industry Association ( zulchzulu ) that before a meeting with Baker on Monday , " There had been surprising notes of criticism ( from the United States zulchzulu He added . " Criticism is not a one - way street zulchzulu He did not elaborate , but Bonn has often called on the U . S . To reduce its federal budget deficit . Over the weekend Baker had criticised West German economic policies , saying that rises in domestic interest rates here were not in the spirit of last February ' s Louvre pact to stabilise currencies ((()))) . Stoltenberg told the zulchzulu that his meeting on Monday with Baker had resolved differences between the two countries . At a news conference earlier on Tuesday Stoltenberg had declined to comment specifically on Baker ' s criticisms , but he had said that after three hours of discussions on Monday , " one remark or another has been clarified zulchzulu

ECUADOR POSTS 71 . 3 MLN DLR 8 - MTH TRADE DEFICIT Ecuador posted a trade deficit of 71 . 3 mln dlrs in the first eight months of 1987 , compared with a surplus of 468 . 6 mln dlrs in the same period of 1986 , central bank figures show . Ecuador suspended oil exports , which made up 55 pct of the value of its total exports in 1986 , for five months this year after an earthquake in March shattered the country ' s pipeline . The central bank said the value of exports from January to August 1987 stood at 1 . 132 billion dlrs and imports 1 . 204 billion dlrs . Net international monetary reserves declined to 57 . 5 mln dlrs at end - September from 146 . 8 mln dlrs at end - September 1986 .

FED EXPECTED TO ADD RESERVES The Federal Reserve will enter the government securities market to supply reserves via either a large round of customer repurchase agreements or by overnight or possibly four - day system repurchases , economists said . They said the Fed has a fairly large add need and is likely to face the most reserve dislocations early in the new statement period started today as corporate tax payments swell Treasury balances at the Fed . Fed funds hovered at 6 - 3 / 4 pct after averaging 6 . 80 pct yesterday .

FED EXPECTED TO SET CUSTOMER zulchzulu The Federal Reserve is expected to add reserves to the U . S . banking system by arranging a round of customer repurchase agreements during this morning ' s intervention period , several economists said . Some others , however , judged that the Fed has almost completed its reserve - adding requirement for the statement period ending on Wednesday and will not need to operate today . Fed funds were trading at 6 - 11 / 16 pct , compared with Friday ' s average of 6 . 63 pct .

FED ADDS RESERVES VIA CUSTOMER zulchzulu The Federal Reserve entered the U . S . Government securities market to arrange 1 . 5 billion dlrs of customer repurchase agreements , a Fed spokesman said . Dealers said Federal funds were trading at 6 - 1 / 2 pct when the Fed began its temporary and indirect supply of reserves to the banking system . Most had expected the Fed to supply reserves directly via System repurchase agreements or to add them indirectly through two billion dlrs or more of customer repurchase agreements . Some believe the Fed is adding fewer reserves than are needed to keep upward pressure on rates and so help the dollar .

FED ' S JOHNSON SAYS LOUVRE ACCORD STILL VITAL Federal Reserve Board Vice Chairman Manuel Johnson said the Louvre Accord is still healthy , but said the United States and West Germany must work out differences over their respective roles in fulfilling the accord . " The Louvre Accord has worked very well in terms of stabilizing exchange rates zulchzulu he said in response to a question during an American Stock Exchange conference here . He said exchange rates have been stable so far in 1987 as a result of the accord .

YIELD ON 91 - DAY SAMA DEPOSITS RISES The yield on 91 - day bankers security deposit accounts issued this week by the Saudi Arabian Monetary Agency ( SAMA ) rose to 6 . 43896 pct from 6 . 21563 a week ago , bankers said . SAMA lowered the offer price on the 500 mln riyal issue to 98 . zulchzulu from 98 . zulchzulu last Monday . Like - dated interbank deposits were quoted today at 6 - 3 / 4 , 5 / 8 pct . SAMA offers a total of 1 . 9 billion riyals in 30 , 91 and 180 - day accounts to banks in the Kingdom each week .

U . S . SENATORS PROPOSE BAN ON TOSHIBA IMPORTS Three U . S . Senators said they will propose a temporary ban on imports of all Toshiba products due to the company ' s illegal sales of sensitive high - technology goods to the Soviet Union . Senator Jake Garn , John Heinz and Richard Selby said at a hearing of the senate banking committee on export control , they will offer the proposal as part of a major trade bill when it is brought before the senate this summer . Garn , a Utah Republican , said " I am talking about specific retribution on a company that endangers the security of their own country and ours zulchzulu

U . K . MONEY MARKET GIVEN FURTHER 68 MLN STG HELP The Bank of England said it provided the market with a further 68 mln stg assistance this afternoon , bringing its total assistance on the day to 143 mln stg . Shortly before , the Bank said it had revised its estimate of the shortage up to 450 mln stg from the earlier forecast of 400 mln . During the afternoon , the bank bought 22 mln stg of band two bank bills at 9 - 13 / 16 pct and two mln stg of local authority bills plus 44 mln stg of bank bills in band four at 9 - 11 / 16 pct . These rates were in all cases unchanged from previous intervention levels .

zulchzulu BALANCE OF PAYMENTS IN DEFICIT IN MAY Italy ' s overall balance of payments showed a deficit of 3 , 211 billion lire in May compared with a surplus of 2 , 040 billion in April , provisional Bank of Italy figures show . The May deficit compares with a surplus of 1 , 555 billion lire in the corresponding month of 1986 . For the first five months of 1987 , the overall balance of payments showed a surplus of 299 billion lire against a deficit of 2 , 854 billion in the corresponding 1986 period .

UAE CENTRAL BANK CD YIELDS UNCHANGED Yields on certificates of deposit ( CDs ) issued today by the United Arab Emirates central bank were unchanged from those on last Monday ' s offer , the bank said . The one month yield was set at last week ' s 6 - 3 / 4 pct , while two and three month CDs also remained unchanged at 6 - 13 / 16 pct . The six month yield was set at seven pct .

U . K . MONEY MARKET GIVEN 53 MLN STG ASSISTANCE The Bank of England said it provided the money market with 53 mln stg assistance in the morning session . This compares with the bank ' s estimate of a shortage in the system of around 300 mln stg which it earlier revised up from 250 mln . The central bank made outright purchases of bank bills comprising 46 mln stg in band three at 9 - 3 / 4 pct and seven mln stg in band four at 9 - 11 / 16 pct .

REAGAN URGES FULFILLMENT OF EXCHANGE ACCORDS President Reagan , preparing to depart for the Venice economic summit on Wednesday , said the United States and its allies must fulfill agreements on exchange rate stability . " Economic policy decisions made last year in Tokyo , and at this year ' s meetings of Group of 7 Finance ministers in Paris and in Washington , cannot be ignored or forgotten zulchzulu he said . " The commitments made at these meetings need to be translated into action zulchzulu Reagan said in a pre - summit speech celebrating the 40th anniversary of the Marshall Plan .

AUSTRIAN CURRENT SURPLUS GROWS IN FOUR MONTHS Austria ' s current account surplus grew to 11 . 0 billion schillings in the first four months this year from 8 . 2 billion in the same period last year , the National Bank said . In April , the current account recorded a deficit of 300 mln schillings compared with an 800 mln surplus in March and an 800 mln deficit in April , 1986 , the bank said in a statement . The trade deficit in the first four months fell to 16 . 4 billion schillings from 17 . 5 billion in the same period last year while in April the deficit was 4 . 1 billion compared with 6 . 9 billion in March and 3 . 6 billion in April , 1986 .

zulchzulu HAS HAD CONTACT WITH G - 7 MINISTERS French Finance Minister Edouard Balladur has been in contact with several Finance Ministers from the Group of Seven leading industrial countries , in particular West German Finance Minister Gerhard Stoltenberg , to discuss the crisis on world markets , Finance Ministry sources said . They did not say whether the contacts had led to concerted action on the markets or merely an exchange of views . But they added that French ministry officials were continuing the contacts to exchange views on market performance .

U . S . BUSINESS LOANS FELL 896 MLN zulchzulu Business loans on the books of major U . S . banks , excluding acceptances , fell 896 mln dlrs to 275 . 61 billion in the week ended June 10 , the Federal Reserve Board said . The Fed said that business loans including acceptances fell 546 mln dlrs to 278 . 12 billion dlrs .

U . S . HOUSE SPEAKER DENIES TRADE BILL HURT STOCKS House Speaker Jim Wright dismissed charges that the trade bill before Congress contributed to the fall in stock prices on Wall Street . " That is utterly ridiculous zulchzulu the Texas Democrat told reporters . Treasury Secretary James Baker and other administration officials over the weekend pointed to the pending legislation -- which they brand too protectionist -- as a key factor in the record - setting drop .

zulchzulu SETS NEW REPURCHASE TENDER The Bundesbank set a new tender for a 28 - day securities repurchase agreement , offering banks liquidity aid at a minimum bid rate of 3 . 50 pct , a central bank spokesman said . Banks must make their bids by 1400 GMT today and funds allocated will be credited to accounts tomorrow . Banks must repurchase securities pledged on July 1 .

FED ADDS RESERVES VIA OVERNIGHT zulchzulu The Federal Reserve entered the U . S . Government securities market to arrange overnight System repurchase agreements , a Fed spokesman said . Dealers said that Federal funds were trading at 6 - 3 / 8 pct when the Fed began its temporary and direct supply of reserves to the banking system .

Bank of France added money market liquidity at 7 - 3 / 4 pct - dealers Bank of France added money market liquidity at 7 - 3 / 4 pct - dealers

BAKER REMARKS AIMED AT CONFIRMING ACCORD - zulchzulu Japan ' s Finance Minister Kiichi Miyazawa said that remarks by U . S . Treasury Secretary James Baker on Sunday that some nations were not abiding by the spirit of the Louvre Accord were just aimed at reaffirming that agreement . The agreement , to cooperate in stabilising currencies , was reached in Paris in February this year . The finance minister made the remark at a news conference which followed a morning cabinet meeting .

TREASURY ' S BAKER SAYS TRADE , CURRENT ACCOUNT IMBALANCES " SIMPLY NOT SUSTAINABLE " TREASURY ' S BAKER SAYS TRADE , CURRENT ACCOUNT IMBALANCES " SIMPLY NOT SUSTAINABLE "

Tokyo - Bundesbank ' s Schlesinger sees no reason to lower interest rates Tokyo - Bundesbank ' s Schlesinger sees no reason to lower interest rates

Poehl says German and international interest rate rises are cause for concern Poehl says German and international interest rate rises are cause for concern

EC zulchzulu EXPORT 55 , 000 TONNES MAIZE , MAXIMUM REBATE 130 zulchzulu / TONNE - TRADE SOURCES . EC zulchzulu EXPORT 55 , 000 TONNES MAIZE , MAXIMUM REBATE 130 zulchzulu / TONNE - TRADE SOURCES .

Miyazawa says Baker ' s remarks were aimed at just reaffirming Louvre agreement Miyazawa says Baker ' s remarks were aimed at just reaffirming Louvre agreement

EC zulchzulu EXPORT 65 , 000 TONNES BARLEY , MAXIMUM REBATE 138 . 75 zulchzulu - BRUSSELS TRADE EC zulchzulu EXPORT 65 , 000 TONNES BARLEY , MAXIMUM REBATE 138 . 75 zulchzulu - BRUSSELS TRADE

Miyazawa says G - 7 still strongly supports Louvre Accord Miyazawa says G - 7 still strongly supports Louvre Accord

Poehl says chances for exchange rate stability are good Poehl says chances for exchange rate stability are good

REAGAN SAYS THERE IS ROOM FOR FURTHER DECLINES IN INTEREST RATES REAGAN SAYS THERE IS ROOM FOR FURTHER DECLINES IN INTEREST RATES

TREASURY ' S BAKER MET WEST GERMANY ' S zulchzulu TODAY , AGREED TO SUPPORT LOUVRE PACT TREASURY ' S BAKER MET WEST GERMANY ' S zulchzulu TODAY , AGREED TO SUPPORT LOUVRE PACT

Balladur urges G - 7 to respect pledges on monetary policy in Louvre accord Balladur urges G - 7 to respect pledges on monetary policy in Louvre accord

FED SAYS IT SETS TWO - DAY SYSTEM REPURCHASE zulchzulu FED SAYS IT SETS TWO - DAY SYSTEM REPURCHASE zulchzulu

FED ' S SEGER SAYS U . S . THRIFT INDUSTRY NEEDS STABLE INTEREST RATES FED ' S SEGER SAYS U . S . THRIFT INDUSTRY NEEDS STABLE INTEREST RATES

FED SAYS IT SETS TWO BILLION zulchzulu OF CUSTOMER REPURCHASE AGREEMENTS FED SAYS IT SETS TWO BILLION zulchzulu OF CUSTOMER REPURCHASE AGREEMENTS

Stoltenberg says he assumes monetary cooperation will continue Stoltenberg says he assumes monetary cooperation will continue

zulchzulu SEES NO REASON TO CHANGE MONETARY COURSE - VICE - PRESIDENT SCHLESINGER zulchzulu SEES NO REASON TO CHANGE MONETARY COURSE - VICE - PRESIDENT SCHLESINGER

20 - OCT - 1987 20 - OCT - 1987