INCREASED PRICES.

New Zealand Herald, Volume LXVIII, Issue 20987, 25 September 1931, Page 10

INCREASED PRICES.

GOODS OF FOREIGN ORIGIN. ADVERSE EXCHANGE EFFECT. WITHDRAWAL OF QUOTATIONS. The interruption of buying from foreign countries has been one of the first effects felt in .Auckland of the suspension of the gold standard by Great Britain. At present tlie position is somewhat obscure to even the best-informed merchants, but adverse foreign exchanges are increasing tho landed cost of goods of foreign origin. An example of this is the shipment of Californian onions which will be landed by the Sonoma to day. The documents relating to this shipment came to hand yesterday and as a result of the adverse rate of conversion of dollars the price of the onions will be increased to the consumer by a little more than Is 9d a bag. Many Auckland merchants expect that similar increases will subsequently have to be carried by all goods from foreign countries, but owing to tho uncertainty of the position at the moment shippers have withdrawn practically all current quotations pending a clearer outlook. One firm of London exporters which deals extensively in Spanish, Italian and French lines, such as nuts, almonds, beans and similar requirements, which ato becoming more prominent with the approach of the summer and Christmas season, advised its Auckland agents yesterday that all lines j affected by foreign exchange were advaming in price. Similar advices were received from other quarters and until something further eventuates merchants are merely marking time, so far as overseas buying is concerned. AMERICAN EXCHANGES. PROVISIONAL ARRANGEMENT. | FOUR DOLLARS TO THE POUND. Acting on instructions issued on Tuesday, tho banks are not at present prepared to sell dollar drafts or telegraph ' transfers on America, owing to tho instability of the exchanges. Bills drawn on Auckland importers are being converted on the basis of four dollars to the pound, subject to the reservation that adjustments will be made when the rates can be definitely fixed. This arrangement applies both to the United States and to Canada. The effect of this rate is that goods which cost £1 in America with tho exchange at par (4.866 dollars to tho pound) now cost approxi- j mately £1 4s 6d. In computing American exchange, the practice is to convert dollars into pounds at the rale current between London and New York, and calculate the New Zealand currency equivalent on the latter amount at. current exchange rates. Owing to the present instability of the exchanges the effect upon the conditions of tho Dominion's trade with such countries as Canada and the United States is uncertain. The pound sterling will apparently remain for some time at a substantial discount in terms of the American dollar, so that the cost of imports from the United States will be greater —assuming the maintenance of tho present exchange relation between New Zealand currency and sterling. On the other hand, there will be an exchange premium on whatever exports can be made to the United States. The present, nominal quotations indicate similar effects, to a smaller extent, upon trade with Canada. The Canadian dollar is at a premium in terms of sterling, but a smaller premium than the American dollar, the difference roughly corresponding with the extent of the discount at which it is quoted in New York. On these facts, it is more advantageous to import from Canada than from the United States and to export to the United States —other things being equal. The position will, however, not be defined until it is known whether tho Canadian authorities propose to restore the currency to parity with the American dollar or have the means to do so. By shipments of gold exceeding £7,500.000 in December and January, the Canadian dollar was raised to par "on February 1, but later fell again to a discount and in spite of further gold shipments to New York has remained below gold point for some time, being quoted at a discount in London also. As New York is financially predominantly important to Canada, official policy will presumably aim at maintaining the quotation in New York, and consequently the premium ovpr sterling.