Australian dollar down 1.5 p.c. against $NZ

Press, 4 August 1977, Page 2

Australian dollar down 1.5 p.c. against $NZ

NZPA Sydney The Australian dollar has been devalued almost 2 per cent against the United States dollar and about 1.5 per cent against the New Zealand dollar. The trade-weighted index of value of the dollar has t . varied from 92.5 to 91.1 representing a devaluation against the “basket” of currencies of 1.5 per cent. The new rate for the Australian dollar makes an effective devaluation of 11 per cent against the United States dollar since before the 17.5 per 'ent devaluation in November last year. The Prime Minister (Mr Muldoon) said that the Australian devaluation would not result in a change to the New Zealand dollar.

“It brings us back to our relationship with the Australian dollar at the end of December — the last time the Australian dollar was moved. “Therefore, there was no need to make a specific move on the Australian decision,” Mr Muldoon said.

The new rates means that Australian exporters will gain a slight advantage on the New Zealand market, and New Zealand exporters can expect a slightly lower

return for their goods sold in Australia (unless their contracts cover a devaluation). New Zealand tourists visiting Australia will get slightly more Australian money for New Zealand dollars.

The decision to alter the value of the Australian dollar was made by the Governor of the Reserve Bank of Australia, the Secretary of the Treasury, and the Secretary of the Department of the Prime Minister and Cabinet.

Since September 1974 the Australian dollar has been linked to movements in the average value of a basket of currencies weighted in pro-

portion to each country’s trade with Australia. The effective devaulation was welcomed in Australian agricultural, manufacturing, and mining circles.

Australia’s overseas reserves fell at an accelerated rate during July as net capital inflow failed to offset the current account deficit for the third month in succession.

Last month there was a S27IM drop to $2223M in the Reserve Bank’s holdings of gold and foreign exchange. The holdings of gold and foreign exchange had fallen for 10 successive weeks, with the decline in the latest week increasing to $61.2M.