EXCHANGE RATE

Nelson Evening Mail, Volume 79, 13 January 1944, Page 6

EXCHANGE RATE

PLAN TO RESUME PARITY SUGGESTION IN BANKING JOURNAL A suggestion that the time is ripe for New Zealand to resume a parity of exchange with England is made by a London contributor to the Australasian Insurance and Banking Record. He says that the devaluation of New Zealand’s currency in 1933, so that £125 New Zealand equalled £IOO sterling, was deliberate, not brought about by normal economic influences, and the reasons for which it was assumed to be necessary no longer obtain, nor will they obtain after the war. “The de facto 25 per cent, tariff barrier is unfair to the Mother Country, and to that extent the favoured nation treatment given her by the Dominions is nullified,” states the correspondent. "The favouring of exporters at the cost of the whole of the rest of the people is inequitable. It may be contended that in a primary producing country all live on the producer, and that every worker, therefore, as regards benefits from exports, must be regarded as a producer and a consumer. “No doubt this is true in a broad sense, but the matter of degree has to be taken into account. It must be admitted that the benefit given to the farmer of 5s in every pound is much greater than that conferred upon the remainder of the community. If the premium to farmers were provided by a subsidy it would not be said that the rest of the people participated in it, but that, as actually tl%' case in the devaluation of the pound, they would pay it.” The correspondent suggests that the currencies should be restored to a parity by a loan obtained from England representing the difference between the pound sterling and the New Zealand pound in circulation on a date agreed upon, the money to be paid into an exchange equalisation account, to be treated purely as a stabilising account. , It was to be hoped that New Zealand produce in post-war markets would find ready markets at a just price, the correspondent continued. There should be no need if economic sanity was preserved to bolster up exports by a subsidising levy on the whole people. Until the sinking fund for the redemption of the loan was complete, the importer would continue to pay into it a levy of 4s in the pound, but on completion of the fund payments would cease and the relief would be handed on to the people in a corresponding cheapening of "imported goods.