EXCHANGE RATE

Nelson Evening Mail, Volume LXVI, 19 August 1933, Page 7

EXCHANGE RATE

FURTHER ATTEMPTS TO UNDERSELL BANKS GOVERNMENT’S POSITION The efforts of an English firm to sell practically unlimited London funds at an exchange rate of £123 15s per cent., have stirred other brokers to action (says the Christchurch “Press”). There are indications that a determined attempt will be made during the current importing season to undersell the banks, which by agreement with the Government are compelled to maintain a rate of £125 per cent. In the lust two days two Christchurch brokers have called on the same retail house that was visited on Monday by the English firm’s representative, and have offered London funds in £SOOO lots at rates varying, it is understood, from £123 15s per cent to £124 5s per cent. Similar offers are being made to other firm 3 engaged in the import trade. The ultimate effect of this elasa of business, if it becomes general, will be to increase the surplus of London funds for which the Government is responsible to the Associated Banks, and for which 25 per cent, or £125 has been paid in New Zealand on every £IOO realised in Lo'ndon. It had been anticipated that the full requirements of importers would bo drawn from these funds, and in proportion as importers are financed outside then the Government’s burden will become heavier.

The “Evening Post” reports that similar business in exchange is being conducted in Wellington. When the question of competition in exchange rates was referred to the Acting-Prime Minister (the lit. Hon. J. G. Coates), he told the “Post” that lie was not in a position at the moment to make any comment.

It is presumed Unit if the extent of this outside business threatens the exchange position, measures may be taken to control it.