FUNDS HELD ABROAD

Dominion, Volume 26, Issue 105, 27 January 1933, Page 8

FUNDS HELD ABROAD

Possibility of Transfer to New Zealand EFFECT OF HIGH EXCHANGE It is possible that the recent action of the Government in fixing the exchange rate at 25 per cent, above par may result in a good deal of extra money being released in the Dominion, apart from any direct advantages that may be reaped by the exporting section of the community. It is understood that considerable sums of money were being held in Australia by both private firms and individuals, and this will probably now be brought back to New Zealand. Before the exchange rate was raised, £llO in New Zealand currency was worth £124/10/- in Australia, and, as a result, many firms doing business in both countries preferred to hold profits made in the Commonwealth in their Australian branches, even though they might have no immediate use for the money. Had they transferred it back to New Zealand, they would have received only £llO here for every £124 10/- they sent from Australia. The same position applied to individuals, many of whom preferred to invest their holdings in Australian currency in Australian stocks, and to let the interest accumulate on fixed deposit rather than to incur the loss of bringing it immediately to New Zealand. Funds May Return. Now, however, much of this more or less idle money will possibly be returned to New Zealand, since-the exchange between the two countries has been brought to par by the Government’s action. New Zealand firms which have hefd operating accounts in Sydney or Melbourne, as the case may be, will it more profitable to have that 'money at their immediate command in New Zealand, and to transfer money to Australia when necessary at no greater cost than the ordinary bank charges. It is stated that already there had been a certain number of private transfers of cash from Australia to the Dominion. A “Dominion” reporter was told yesterday that several business men, who had acquired capital in the Commonwealth and left it there on fixed deposit on account of the adverse exchange, would transfer those funds to New Zealand as soon as the period of the deposit had elapsed. May Be Large Total. It is difficult to form any estimate of the exact amount involved, but the Australian exchange has been unfavourable to the transmission of money to New Zealand for so long that it seems probable that there may be a considerable total involved. The amount brought back to New Zealand by both private firms and individuals may turn out to be fairly large and to result in a good deal more money being put into circulation In the Dominion. To a very much lesser extent the same thing will apply to money held in England. The New Zealand exchange on Great Britain had been favourable fpr some time. £lOO worth of New Zealand currency having been worth £lO9/12/6 in Great Britain for many months. Now, however, £lOO worth of New Zealand currency is worth £125 in Great Britain, and this added inducement to transfer funds from London to New Zealand may result in more money being released in this country.