RATES OF EXCHANGE

Nelson Evening Mail, Volume LXIV, 19 June 1931, Page 8

RATES OF EXCHANGE

'•——— NO REDUCTION IN CLOSE SIGHT RANKS NOT BENEFITING (iiy Tolograph—Special to "Tbo Mail") WELLINGTON, This Day. Some remarks concerning (l)t' present rates of exchange were made by Mr Watson, chiiirman of the Hoard of Directors, when moving the adoption of the report and bain nee-sheet at the. annual meeting to-day of the proprietors of the Bank of New Zealand. lie staled : "As you are aware, the present rates of exchange between London and New Zealand and vice-versa are• abnormally high, and there is no reduction in close

; sight. The principal factor in advancing rales from time to time has been the necessity for bringing about a rcduclion in imports lo correspond in Nsoiric measure with the reduced value of • oxports. To a considerable extent this result has been attained, but London reserves, which have been heavily depleted, must be built up before reduc- • tion of rates can be looked for. FurTthcr, it is by no means certain that for the present year’the. balance of trade . Nvill be in tbo Dominion’s favour to anything like an pdcquule amount. "Were it not that the Banks held

’■'funds on a large scale in London, the ,j'lso in exchange would have taken place ; sooner than it did and been heavier. “Wo have resolutely refused to permit our New Zealand funds in London to "be availed of for the benefit of Aus- ■ India, but, unfortunately the. Hanks do . not control the exchange position, consequently through channels outside the Banks, Australians have secured posses- ' sion of an appreciable amount of New Zealand funds in London. “A large section ofj the public does /, not appear to recognise that whilst the 'margin between buying and selling rates remains unaltered, the Banks derive no ' advantage cither from a high buying or - a high selling rate. As a matter of fact, it is almost certain that during the

period of adjustment to normality, the Banks must, lose money on their exchange transactions. ‘‘The position of Australian exchange is also abnormal, and until conditions in lim Commonwealth substantially improve, there is lit 110 or no hope of alteration. Complaints have been made by New Zealand exporters to Australia that the exchange rale is seriously restricting trade. That no doubt is the case. On tho other hand, our Bank has funds in Australia far ?u excess of its reuuirenioiils —an excess which in present conditions it is impossible to shift. In fuel, if would suit us lo stop buying iinv exchange on Australia for a long lime to conic. "It is well to emphasise that it is the producing, and also the manufacturing industries of the Dominion, and not the Banks, that are. reaping the advantage of the present abnormal exchange rales on London.”