Flexibility In Money Crisis

Press, Volume CIX, Issue 31985, 12 May 1969, Page 1

Flexibility In Money Crisis

(New Zealand Press Association)

WELLINGTON, May 11. New Zealand had considerable room to manoeuvre in the present monetary crisis, the Minister of Finance (Mr Muldoon) said today.

The Government did not have similar economic flexibility in November, 1967, when it devalued the dollar, he said. But it was impossible to forecast what would happen to the New Zealand dollar if the French and then the British devalued their currencies.

“Our action would be entirely dependent on what took place with other currencies,” he said. It had been generally agreed last November that the ideal move would be a devaluation of the franc and a revaluation of the Deutschemark.

Mr Muldoon said that he had noted with interest that the International Monetary Fund did not expect widespread currency revaluations. The head of the economics department at Victoria University of Wellington (Professor B. M. Niculescu) said tonight that a devaluation of the franc in the region of 20 per cent could affect the New Zealand dollar. A French devaluation of that size would mean that the

pound, the American dollar, the Japanese yen and the Australian dollar would also devalue, and New Zealand would probably follow, Professor Niculescu said. However, a French devaluation of about 5 per cent would mean a smaller change in the value of sterling, possibly a 3 per cent devaluation.

In this case New Zealand could avoid altering the value of its dollar.