No sharp Australian devaluation

Press, 10 February 1982, Page 23

No sharp Australian devaluation

PA Sydney The Australian Government will continue to allow the value of the dollar to fall in line with its balance of payments. The Prime Minister (Mr Fraser), in an interview published in Sydney made it clear there would be no abrupt change in the exchange rate. “We’re not going to have a 10 per cent devaluation or a 10 per cent appreciation. We don't run it that way." he told the Business Review Weekly." "There is a managed rate with very gentle, sometimes imperceptible, adjustments according to the market circumstances at the time. “W'e have gone down 5 or 6

per cent against the basket (of currencies) since August 4. There are not going to be those sudden cuts.” Mr Fraser said.

The rural lobby, concerned at exporting problems caused by the high value of the Australian dollar, has been pushing for a speedier depreciation and the chairman of the Broken Hill Proprietary Company. Ltd, Sir James McNeill, has also claimed the dollar was overvalued. Sir James said recently that his company's steel activities were being hurt by increased import competition because of past rises in the dollar's value. Mr Fraser said that the exchange rale was adjusted

and managed pre-eminently on balance-of-payments grounds as it ought to be.

“In times of w’Orld inflation. if your balance of payments is strong enough to have your exchange rates strengthening, well then it assists your ariti-inflation fight.

“But if your balance of payments and prospects are saying to you that the movement should be in the other direction, I don't think it then makes sense to have a continuing appreciation."

■ That was the position Australia had been in for the last three or four months, Mr Fraser said.