STERLING MAY BE SOON DEVALUED WITH N.Z. POUND

Grey River Argus, 20 January 1948, Page 5

STERLING MAY BE SOON DEVALUED WITH N.Z. POUND

WELLINGTON. January 18.

Rumours about the possible devaluation of the pound sterling have rained some ground lately, and more than passing interest has been shown in the likely effect of any such move. As is pointed out in the London Financial Times, no .Government contemplating a change in its currency “would be foolish enough to advertise its intentions in advance . . .”

In view of the fact that New Zealand’s currency is tied directly to sterling, any such development would have an immediate effect here. If sterling were devalued, for example, in terms of dollars, it would mean than sterling would be worth fewer dollars, and automatically the New Zealand pound would also purchase fewer dollars. In other words, United States goods would be dearer to buy in England and • here, while English exports to. the United States would be cheaper there. The effect would be to discourage imports from the United States, and to encourage exports to that market. It would make for a freer flow of goods from the sterling area to the dollar area.

If sterling were devalued there are two things New Zealand could do. One would be to leave the present rate of exchange flOOstg equals £125 NZ and let the .dollar rate swing: or we could alter the exchange rate with England so as to appreciate our money in terms of sterling. In the latter event the dollar exchange rate with New Zealand would not fall so much. As against that, of course, is the fact that New Zealand is infinitely more concerned with sterling trade than with dollar trade, so that any interference with the existing exchange position with sterling may be ruled out.

Internally the effect of a devaluation of sterling would be that goods purchased from the dollar area would be dearer, and that would be reflected in increased costs. With the dollar position as it is to-day, it would, of course, be an added discouragement for New Zealand to buy in the dollar countries. '

Missing Boy Found With Boat.: —Graham Brady, aged 14. who was missed after leaving Rangitoto "Island for Auckland in' a small sailing boat on Friday, was found with the boat at Brown’s Island. He was well.— Auckland, January 19. ■