The Guardian And Evening Star, with which is incorporated the West, Coast Times SATURDAY, DECEMBER 3, 1932. EXCHANGE DIFFICULTIES.

Hokitika Guardian, 3 December 1932, Page 4

The Guardian And Evening Star, with which is incorporated the West, Coast Times SATURDAY, DECEMBER 3, 1932. EXCHANGE DIFFICULTIES.

Inn question of the exchange /rate has been well discussed during recent days and a northern journal points out that although the rate on London is the one that principally matters, New Zealand should not overlook what has been happening to sterling on which her own currency is baised. In the last six weeks the pound has depreciated heavily. On October 15 it would buy 3 dollars and 45 cents; last Monday, 3 dollars and 17 cents, a fall of 28 cents or about 8 per cent. At .par the American cent was worth a halfpenny; to-day it is worth threefarthings. Looked at the other way, prior to September 21 of last year a pe.tny could be changed into two cents; now it represents only 1 1-3 cents.. These illustration's serve to show the severe depreciation of the pound sterling in relation to those foreign eutrrencies which ljave retained the . gold standard. Sterling is now about 3? per cent, off gold and stands at record low 'level. In other words the exchange rate London on New York is bo per reckoning from par. Since the New Zealand pound Is at a discount to sterling of 1.0 per cent., our exchange rate with gold currencies therefore stands about 45 per 'cent. Had Great Britain remained on the gold standard while the New Zealand 1 pound was allowed to slip to the existing level, the exchange rate New Zealand on London would have stood round about 45 per cent. We should have had to pay our annual interest bill of, say, £lO million in gold pounds and to do so would have cost us million in New Zealand pounds. By depreciating sterling, Britain has lightened this burden by 35 per cent. The same applies, of course, to her other debtors who /pay in sterling. Without that depreciation, default iu primary producing countries would by now have been much more general than it is. Certain of our competitors in the British market have clung to gold. Over these the New Zealand producer has an impressive advantage. If Australian producers have an advantage of 15 per cent, over us, our exporters have an advantage of 45 per cent, over those of the United 'States. Against South African md Canadian producers the gain is between 20 and 30 per cent., allowing for the export bonus in tbe former case. Tbits wool that sells for lOd per lb in London is worth lid in New Zealand currency, 124 in Australian, but. only 64d l in South African currency. With the 20 ner cent, bonus added, the South African producer receives less than 8d lb. Tile position is bad enough as it is, but it would have been desperate if we had to accent gold prices for our products.