LOANS AND EXCHANGE

Greymouth Evening Star, 10 June 1933, Page 2

LOANS AND EXCHANGE

THE CURRENCY POSITION. [per press association.] WELLINGTON, June 9. Since the recent advance in the rate of exchange on London, there has been much speculation as to the posi tion in regard to the payment of-in-terest on overseas local body loans. During the past week, the impression has gained ground that this interest is payable in terms of New Zealand currency. As a general statement this does not correctly define the position. The determining factor in fixing in what currency, interest and principal shall be paid, is that of domicile. It was ascertained in official quarters, to-day, that where a loan was raised in London, prospectuses were issued there, subscriptions were invited there and people bought there before high exchange, they would bo entitled to expect their interest and principal to be repaid in pounds sterling. Were they not paid in sterling, it would interfere with the credit of the country, aittl the prospects of a local body concerned being again able to raise a loan would be remote. Where the loan is raised in New Zealand and prospectuses and subscriptions invited here, debenture holders would naturally expect to be paid in New Zealand currency. If by .the terms of the contract, they had the right to ask for payment in London, the local body would pay in London, but in New Zealand currency. With Government loans, the position is different, for it specifically stated in the contract in what currency interest and principal shall be paid.