PEGGED EXCHANGE.

Manawatu Standard, Volume LIII, Issue 243, 11 September 1933, Page 2

PEGGED EXCHANGE.

How long will the pegged exchange, New Zealand on London, be maintained? The Minister of Finance has stated repeatedly that there is no intention of lowering the exchange rate a and importers could thus carry on business with confidence. But “the best laid schemes of men and mice gang aft agley,” and this scheme, of pegged exchange will break down of its own weight. The exchange has been affecting the business, of New Zealand importers and British exporters. Traders always look for ways and means of overcoming obstacles placed in their way, and a way has been found to overcome the exchange difficulty. Several British firms have opened accounts with banks in New Zealand, and are accepting payment for goods sold to Dominion importers in New Zealand currency. That means that exchange on London is not required by the importers, and thus London funds will tend to accumulate with the banks. The Government is bound under the Indemnity Act to purchase the surplus London funds of the banks. Thus tlie amount to be taken over is steadily increasing through this latest movement of British exporters and New Zealand importers, and it is a question what additional London funds the Government will be capable of taking over without causing considerable disturbance to the finances of the country. The people will not tolerate additional taxation so that the only tiling to be done is to reduce the exchange, and that is very probable, indeed one might almost say very certain. We believe that when the Prime Minister returns there will be some developments which may possibly cause a Cabinet split. If the exchange is lowered, as it must be, the British exporters who are accepting payment in New Zealand currency will make a profit. The State will receive a little more in Customs revenue through increased imports.—lnvestors’ Journal.