TRANSFERS OF CREDIT.

New Zealand Herald, Volume LXVII, Issue 20517, 19 March 1930, Page 17

TRANSFERS OF CREDIT.

'ATTITUDE OF THE BANKS. /■ EXCHANGE RATES ON LONDON , HIGHER COST OF IMPORTS. exporters reap a benefit. The high rates of exchange operating against transfers of credit from New Zealand to Great Britain, consequent on the shortage of bank funds in London in comparison with the demands being niadc, is tending to increase the cost of imported goods, while in some cases business people are experiencing a certain amount of difficulty in carrying out transactions. A redeeming feature of the present slate of the exchanges, however, is that the exporters are receiving an increment above the prices for their produce or other goods which would not be obtainable in more normal times. Banks Exercising Discretion. Instances have been quoted in the city of persons wishing to transfer funds to London being refused the services of the banks' for the whole or part of the amount required and having to mako arrangements outside the usual channels at a greater cost than the rates being charged by the banks. Inquiry in banking circles indicates that such refusals, £0 far as they have taken place, aro largely due to the banks which operate Jn both Australia and New Zealand haviijn- insufficient funds in London at present to enable them to meet all the demands; of their customers. Bankers aro disinclined to comment on the position or indicate the basis on which they are dealing with applications, but it appears that some of the banks are exercising a fairly wide measure of discretion in the selection from the requests made of those which they are able to meet. On the other hand, the banks which do not operate to any considerable extent in Australia state that they have not had any difficulty in meeting the legitimate requirements of their clients. Their attitude is that regular clients must have first consideration, and they are not able to oblige all- persons who may be experiencing difficulty in securing the transfer of credits from New Zealand. Influence of Australia.

The view .generally held in financial circles is that the exchange rates are higher than would be required to secure adjustment between imports and exports if the Dominion were entirely free from direct influence by the heavily unfavourable balance of Australia, lhe close/inter-relation of the banking operations of the two countries is causing New Zealand to suffer practically the same penalties as the Commonwealth. It is granted, however, that our trade position requires careful watching, and that the restrictions in force are largely beneficial, in spite of the measure of inconvenience which is resulting. It is pointed out that if the banks which have funds available in London usod/?no discretion in dealing with requests for transfers of credit the position here might become as difficult as it now is in Australia. People there who are having difficulty in securing accommodation would be able to have their business done, by agents through New Zealand banik. Higher Costs ol Importing. The head of a large importing firm in Auckland stated that no difficulty had been experienced in regard to its financial operations, but the high exchange rate was increasing the cost of imported goods. Quoting the rate for telegraphic transfer, lie said that the cost on every £IOO /A of imports now was £3 12s 6d, whereas twelve months ago it was only 15s. That rate had been unchanged from December, 1928, until July, 1929. He added, however, that there was a tendency for the higher landing charges to bo offset, by lower prices caused by restricted demand. Payment for English purchases is less of'.tn made by telegraphic transfer of funds from this end than by the seller drawing on. the New Zealand buyer and having the draft discounted by a bank in London. The current rates charged for this class of transaction, compared with those which ruled from December, 1928, until last July, are:—Drafts payable on sight, £4 now, £1 10s then; 30 davs, £4l lis 3d, £2 ll 3d: 60 davs. £5 2s 6d. £2! 12s 6d; 90 days, £5 13s 9d, £3 3s 9d. So far as the Dominion's exporters are concerned the benefit of the exchanges lies in the fact that receive from the banks here £lOl 12s 6d for every £IOO worth of produce sold in Britain. The premium is less on bills which arc not for prompt payment.