HIGH EXCHANGE RATE

Hawera Star, Volume LIV, 1 May 1934, Page 7

HIGH EXCHANGE RATE

STAYING AT 25 PER CENT.

FALL BELIEVED UNLIKELY SURPLUSES AT LONDON STERLING PARITY COSTS (By Telegrapn—Press Association.) AUCKLAND, May 1. “Doubtless tho exchange will be kept at 25 per cent. It may come down later by one per cent. That remains to be .seen, but I don’t think it will,” declared the Minister of Finance, the Rt. Hon. J. G. Coates, when discussing the accumulated exchange surpluses at Papakura last night. He quoted £20,000,000 a,s the -figure representing the -surpluses in London. It had been saidi that the exchange premium .should be replaced by a subsidy, hut only “weather vanes” reaßy suggested that, he continued. It would cost us £5,000,000 to revert to parity with tho -sterling. After the Reserve Bank functioned the exchange rate would be arranged by co-operation between the bank and the Government and after August 1 there would be no interest to pay on Treasury Bills. 1 Continuing, the Minister saidi: “There seems to he a stacking up of money and my impression is that we may expect lower interest rates. Before forecasting, however, I would prefer to wait until the Reserve Bank is functioning and adjusts- the interest rates more in line with the capacity of industry to meet these charges.” Mr Coates claimed that the raising -of the exchange had not contravened tho Ottawa- agreement. Those Who say we have, as a result of the Ottawa plans, to remove revenue tariffs on United Kingdom imports are fabricating something that is utterly untrue,” he declared.

The Minister next referred to the apparent lack of enterprise by New Zealand- exporters to develop new overseas markets after the opening of the tariff doors. He recalled that after protracted negotiations with New Zealand the United States had agreed to the raising -of the embargo on New Zealand fruit and everything went well until it came to -supplying the goods. Forty-eight thousand cases of apples were arranged for, but only 480 cases reached the ship’s -side. In the end, however, New Zealand sent ten to fifteen thousand cases to New York to fulfil wha-t wa-s practically an order. It was quite likely that the whole country would have to stand tim -first shock of the cost incident to the establishment of a market ini the east and the development of other markets, but once what he would term an all-red route had been inaugurated the sales could- be built up and diversified.