THE N.Z. POUND

Evening Post, Volume CXXVI, Issue 98, 22 October 1938, Page 9

THE N.Z. POUND

DEPRECIATION STEP

LONDON COMMENT

NOT DUE TO LABOUR [VICTORY

By Telegraph—Press Association—Copyright.

(Received October 22, 10 a.m.)

LONDON, October 21.

The "Financial News" points out that the alteration in the New Zealand exchange rate is only of technical significance and a long overdue remedy for the loss of the trading banks when they obtained sterling from the Reserve Bank.

The ."Financial Times" says that the move was necessary to enable the trading banks to conserve their oversea balances.

The "Economist" says that New Zealand credit has long felt the consequences of the Government's efforts io improve the lot of the dairy farmer and the ordinary citizen, which is commendable in principle if costly in practice. Despite Mr. Savage's assurances, the British investor cannot regard the future without anxiety, owing to New Zealand being faced with the ever-recurring problem of transfers. The substantial decline in trade during 1938 suggests that the export surplus is again insufficient to provide service of the Government's £,10,000,000 debts to Britain.

Meanwhile stocks remain deflated, although falls ranging up to four points since April, when the pensions for people of 60 were announced, are not entirely attributable to the general reaction against fixed interest securities. Mr. Savage's first problem in connection with the British investor is the repayment of £17,000,000 3& per cents, next January.

The City Editor of "The Times" expresses the opinion that the slight depreciation of the New Zealand pound is not connected with the elections,

though if the National Party had been returned and had reversed the Labour dairy policy, the trading banks presumably would not have been short of sterling.

The "Daily Herald" says that the devaluation is not due to the Labour victory. It is a step that was long contemplated by the trading banks.