Exchange Control Discussed

Northern Advocate, 22 July 1939, Page 7

Exchange Control Discussed

(From Our Parliamentary Reporter) WELLINGTON, This Day. The section of the Reserve Bank’s annual report dealing with exchange control recapitulates information published regarding the broad lines on which the system is operated, adding: “In operating the permit system for transfers, the bank has been guided by your assurance to the effect .that one of the objects of exchange control is to enable overseas debts, whether Government, local body or private, to be met on their due date.” Attention is called to the fact that, although exchange control covered a considerable portion of the export season, the bank was only able to build up its sterling holding by £627,000. An estimate is made of £14,000,000 annually as the normal requirement for overseas debt services and; other transactions, including travellers’ requirements. Attention is called to the fact that the surplus of exports over imports for the year fell to £3,459,000, It is suggested the decline in the favourable balance of overseas trade accounted for half of the shrinkage in overseas funds. It was also evident that there was an abnormal overflow of capital. The report then comments: “In view of the relationship between internal credit expansion and the demand for overseas funds, the connection between the total increase of more than £14,000,000 in accommodation granted by the Reserve Bank to the Government, and the loss of overseas funds which occurred during the year is significant.”