CURRENCY DEPRECIATION

Evening Post, Volume CXV, Issue 67, 21 March 1933, Page 6

CURRENCY DEPRECIATION

(To the Editor.) Sir, —I send you an extract from the monthly report of the National City Bank of New York in the February issue, which, I think, will be of much interest to your readers, both in the country and towns. It is always illuminating to hear what other people think of us and our actions. — I am, etc., F. L. THOMAS. The extract is as follows:—"In December the Union of South Africa suspended gold payments and allowed its currency to depreciate, and within the past. month the. Government of New Zealand has altered the exchange rate on London from 9 to 25 per cent. discount on sterling. This step was taken, the cables state, 'in order to protect primary producers in New Zealand from a further fall in export prices.' Stated in another way, this means that the exporters of New Zealand will be able to sell at lower prices in terms of gold, while receiving the same or a higher price in their own depreciated' currency^ Temporarily this may appear to be an advantage, but, of course, the depreciated currency will soon lose in internal "purchasing power, and the exporters will lose their apparent gain. Moreover, it is possible that other exporting countries may play the same game against New Zealand. Meanwhile, a new and depressing competition is brought to bear against the world prices for wool, butter, meats, and all other products which New Zealand exports, and naturally those products of the United States entering the world markets will be affected. The whole matter illustrates that limits of competitive currency depreciation can never be set; the only absolute limit would be the worthlessness of all currencies."