LONDON FUNDS

Press, Volume LXXIV, Issue 22464, 27 July 1938, Page 12

LONDON FUNDS

Recent Reductions Reviewed

DECREASE OF £7,820,000 DURING YEAR [From Our Parliamentary Reporter.] WELLINGTON, July 26. The recent reduction in the London balances of the Dominion are reviewed in the annual report of the board of directors of the Reserve Bank of New Zealand, which was tabled- in the House of Representatives to-day by the Minister for Finance (the Hon. W. Nash). Under the heading of “Assets,” the report points out that sterling exchange eligible as reserve for notes in circulation and other demand liabilities decreased during the year by the equivalent of £2,852.696 in New Zealand currency, or £2,300,561 sterling. Any surplus London funds available from the proceeds of the sale of dairy produce. after providing for the Government’s requirements in London, were made available to the trading banks under a special arrangement. The decrease in the Reserve Banks’ holding of sterling was due mainly to further purchases by the trading banks outside the scope of this arrangement in excess of their sales to the bank. “During the year,” states the report, ‘there was a diminution of £7,820.000 in New Zealand currency in the combined net overseas assets of the whole banking system in respect of New Zealand business, as shown by the following comparisons of figures for the last Mondays in March in 1937 and 1938: 1037, 1938. Decrease. £ £ £ Reserve Bank 19.099,000 16,930,000 2.169,000 Trading Banks 15,286,000 9,635,000 5,651,000 Totals .. 34,385,000 26,565,000 7.820,000 “The lowest point reached during the year—£22.985.000 on January 31, 1938 —was £5,095,000 less than the lowest figure for the previous financial year, reached on December 28, 1936.” Figures relating to external trade indicate that the decrease in overseas funds resulted in the main from a shrinkage in the surplus of exports over imports. “The surplus for the year ended March 31.” the report adds later, “was s.veral million pounds less than the favourable annual balance required to provide for Government and local bodies debt services and other expenses overseas, in addition to the estimated amount of invisible items, such as tourist expend'ture, commissions, interest, and the like.” The Dominion has thus been drawing upon its overseas resources during the year to a considerable extent.”