EXCHANGE RATES.

Auckland Star, Volume LXVII, Issue 117, 19 May 1936, Page 10

EXCHANGE RATES.

N.Z. AND LONDON. RESERVE BANK'S POSITION. STATEMENT BY MINISTER. The question of exchange was referred to in a letter which the Auckland Power Board received yesterday from the Minister of Finance, the Hon. W. Nash. - Mr. Nash said, whatever might be the wisdom or otherwise of the external depreciation of the New Zealand pound, there could be no doubt that section 10 of the Reserve Bank of New Zealand Act gave the Reserve Bank power to fix the rate of exchange between New Zealand currency and sterling. The Right Hon J. G. Coates had stated that the fixation would take place in co-operation with the Government, and that New Zealand was not bound to sterling at any fixed and unalterable rate. The relevant part of the Act read that when the bank gave sterling in exchange for its notes, or gave notes in exchange for sterling or gold, the rate at which the exchange was effected should be fixed by the bank.

The Minister said that the particular sub-section was not amended in the recent Reserve Bank Amendment Act, but power was given to suspend, if necessary, the duty of the bank to gi\ e sterling in exchange for its notes. It Was not contended that the rate of 120 represented, or should necessarily represent, the comparative values of the two currencies. When the English and Jsew Zealand pounds were at the old parity they did not represent equivalent purchasing powers, and it was impossible to measure acucrately comparative purchasing powers.

The Minister aclderl that it was the intention of the present Government to endeavour to maintain stable internal prices, and the Government had control of the bank to assist in that policy. It did not mean that the relation between currency and sterling would be altered, but the power was there to do so if necessary. I