Concern over rise in exchange rate

Press, 16 August 1985, Page 24

Concern over rise in exchange rate

PA Wellington A rise in the exchange rate of the dollar was of concern because of its nega-

tive effect on exporters’ incomes, said the Minister of Agriculture, Mr,Moyle. He told Parliament he did not propose to take any special action to safeguard farmers’ interests, but the Government would watch long-term trends in movement of the currency.

The Reserve Bank exchange rate index showed an appreciation in the value of the dollar of about 13 per cent since the July, 1984, devaluation. It was a 9 per cent devaluation compared with June 1984. Farm income effects associated with the exchange rate policy continued to be beneficial, showing a gross income increase for agricul-

tural exporters of 12 per cent since devaluation, Mr Moyle said. For every 5 per cent appreciation in the exchange rate, gross farm incomes would decline 6 per cent a year. Mr Moyle said exchange rates fluctuated and farm incomes also depended on how producer boards managed their funds, including price stabilisation schemes. It was too early to state by how much farm costs would fall because of the effect of the rise in the dollar on imported inputs used by farmers, although there was an immediate effect on fuel costs, Mr Moyle said.