EXCHANGE RATE

Press, Volume LXIX, Issue 20937, 18 August 1933, Page 8

EXCHANGE RATE

Further Attempts to Undersell Banks - ■ i GOVERNMENT'S POSITION j The efforts of an English firm to sell practically unlimited London funds at an exchange rate of £123 1,5s per cent., which were described in "The Press" last Tuesday, have stirred other brokers to action. There are indications that a determined attempt will be made during the current importing season to undersell the. banks, which by agreement with the Government are compelled to maintain a rale of £.125 per cent. In the. last two days two local brokers have called on the same retail house that was visited on Monday by the English firm's representative, and have offered London iunds in £SOOO lots at rates varying, it is understood, from £ 123 15s per cent, to £ 124 5s per cent. Similar offers are being made to other firms engaged in the import trade.

Government's Responsibility. The ultimate effect of this class of business, if it becomes general, will be to increase the surplus of London funds for which the Government is responsible to the Associated Banks, and for which 25 per cent, or £125 has been paid in New Zealand on every £IOO realised in London. It had been anticipated that the lull requirements of importers would be drawn from these funds, and in proportion as importers are financed outside them the Government's burden will become heavier. Business in North Island. The "Evening Post" reports that similar business in exchange is being conducted in Wellington. When the question of competition in exchange rates was referred to the Acting-Prime Minister (the Rt. Hon. J. G. Coates), he told the "Post" that he was hot in a position at the moment to make any comment. It is presumed that if the extent of this outside business threatens the exchange position, measures I may be taken to control it.