WOOL AND EXCHANGE

Evening Post, Volume CXVII, Issue 52, 2 March 1934, Page 6

WOOL AND EXCHANGE

./;-:(fo^he Editor.), r - ■ ;. Sir,—lUiere1 is. much goin" ou at present and 'very.: little' certainty as to just how -the exchange operates- in the recent -,wopl. sales, and •-^-iittle enlightenment would be laueh. appreciated by the thinking -public" . : -z -: .: . (1) Over £5,000;000-came into the country tor .payment for wool purchased at the sales. Are theY: buyers who brought that money into; th(j\eountry entitled to-the 2a per cent, •exchange adde.d to" it and did they, receive it "from the bar/ks? ■' ; (2) Do the.farmers get the 25.per cent, added to. the price, they receive-for the wool, and jilst how is it done?—l am, etc.,

'■[(1) At wool safes held'in JfewJZealahd payment is made in New- Zealand' currency. London' or other overseas buyers would; supply themselves with' New 'Zealand vfunds.aby ;-paying sterling- or their: owji currency; (yen, marks,; or ftanes) -for them ■■-: ,m • iLondon.:-- -..' , .Gr.e.dits ■/': totallin" £5,000,000 in New. Zealand;money could be., obtained for approximately . £4,000,000 sterling. ~;. In> other words,', .by 4>.lodgin"--ia- London; for "transfer'to'New Zealand: the btifer ii 'local bank, credit Sf;^s;6Oo,poO^ess>the" fractional lampiint, .>Vhich ■..■represiints-'' r bapk charges:*-.' But^while ? itfe truevth'at w^the buyersireceive-the 25■jper^cent: exchange through, the vbanksrjney/do'.not really benefit by. it'^because1 thgy'aie tuying on a,; world "market, y;" .'Fbr> plustrat'ion: if Brown and ■ Co.: can buy -New. Zealand wool _at the London sales for. say, £4, and' 5£4; sterlings" sent'-toiKNej^'irZealand^ire^ presents -five New Zealand -pounds; Brownand Co. will be prepared to pay five New Zealand pounds (less freight, etc.), at a Wellington sale ■ for similar wool—other conditions being' eciiial. .:Tho buyer will always reckon. what, the :■ wool. is likely to cost him in his own money and make his bid accordingly. "(2) "When tlie sale is-'iriade in .New Zealand the farmer receives the price quoted and no-more. but. as pointed out abovfc; the price is really: 25 per cent, higher because the buyer has offered more than"he would offer if bidding in sterling-.] - '•■-.■,