EXCHANGE ON AMERICA.

New Zealand Herald, Volume LVI, Issue 17275, 26 September 1919, Page 7

EXCHANGE ON AMERICA.

EFFECT OF FALLING RATE.

COMPLAINTS BY IMPORTERS.

The manner in which the falling rate of American exchange is operating against the interests of New Zealand firms was brought under the notice of the council of the Auckland Chamber of Commerce at its meeting yesterday afternoon. A communication on the subject was received from the Farmers' Co-operative Wholesale Federation of New Zealand, Wellington. '' We have recently had American drafts presented to us for payment at the rate of conversion ruling in New York on the date of the presentation of the drafts in New Zealand," said the writers. " With the violently falling market this operates to the serious disadvantage of importers. We believe merchants are entitled to the rate of exchange which was current at the time drafts wire drawn in America, and which rate they would, and did, get when the market was moving upwards." The practice in some foreign countries, continued the writers, was to meet a bill drawn in foreign currency by payment of a draft on London, say, to offset the exact rate of conversion on the date on which the draft; was presented. It was quite clear that the New York bankers were trying to do this on the present exchange market, thus securing a large profit, ranging at present as high as 12 per cent. They thought all importers should strongly set their faces against this practice, and refuse to meet drafts converted in this " improper, irregular and unfair " way. One or two members present mentioned similar difficulties experienced by themselves. Tn or*» instance quoted, a local firm, instead of drawing at sight on a draft, drew at 60 Hays." It cost them £120. Other members confirmed the statement that the banks were insisting on the payment of the rate of exchange ruling in New York on the date of the presentation of drafts here. Tt was stated that, at the of this week, the rate in America was 4.09.

Incidentally it was remarked that the present position in regard to the rate of exchange was a benefit to Britain. Local firms could obtain better prices for goods shipped to America, and the higher cost of American goods tended to divert orders to Britain.

The letter was formally received, it being agreed that nothing could be done in the matter.