N.Z. dollar

Press, 31 January 1989, Page 12

N.Z. dollar

Sir,—B. L. Palmer (January 21) shows a complete lack of understanding of the subject when he states that “supporters of a lower currency are mainly businesses and farmers who have relatively low expenses and high returns.” If this was the case farmers and manufacturers would not be being decimated as they are at this time. It is also pointless to draw comparisons with countries such as Sweden, West Germany and Japan. These economies have large budget

surpluses, and, huge: domestic markets, so, consequently, do. hot have to rely on. exports to the extent that New'Zealand needs to. Robin Pawsey concedes that high inflation in the past and the Government’s high interest-high exchange rate policies to reduce inflation have severely damaged the export sector. Both he and B. L. Palmer subscribe to the faulty theory that if monetary supply is relaxed somewhat inflation will increase. The former Minister of Finance and the present Governor of the Reserve Bank think likewise. The level of the New Zealand dollar should be traderelated, not determined by currency movements as it is now.— Yours, etc., E. OAKLEY. January 24, 1989.