RATE OF EXCHANGE.

New Zealand Herald, Volume LXIX, Issue 21131, 14 March 1932, Page 11

RATE OF EXCHANGE.

RENEWAL OF CONFIDENCE. RELIEF TO IMPORTERS. EFFECT OF OFFICIAL DECISION. Tr:e decision of the Government not to establish a high exchango rate is welcomed by business men, particularly importer?, who would first have felt the burden of added costs. For the past two months indenting has been extremely flow, but increased orders were cabled as soon as the Government's decision was announced. "While the continuance of the exchange pool regulations is an interference with legitimate buisness processes, it is pleasing that an artificially high rate of exchange will not be established," said Mr. A. M. Seaman, president of the Auckland Chamber of Commerce. "The fear of a further depreciation in currency and the uncertainty of the exchange position has resulted in almost complete stagnation among importing interests. Now trade can resume its normal functioning." The feeling of renewed confidence which tho decision gave was stressed by Mr. F. C. Brookbariks, chairman of the importers' committee of the chamber. It was a great relief to importers who now knew their exact position, ho said. The state of the country was too serious to experiment with artificial pegging at a high rate. It would bo like "swapping horses in tho middle of a stream."

If tho exchango rate had been raised to 30 per cent, the benefits would have been doubtful, while th e disadvantages would have been certain, Mr. Brookbanks said. It was impossible to say if, or by how much, the farming community would ultimately have benefited, but it was certain that all costs, including those of the farmer, would have been greatly increased. New Zealand was largely dependent upon the outside world for its prosperity and to meet competition abroad it was necessary that all costs should be kept low. It was doubtful whether the Government could have obtained tho increased taxation necessary for the added cost of remitting payments to London.

A leading importer described the agitation for a higher exchange rate and its outcome as one of the greatest escapes the business community of New Zealand had ever had. An increased exchange rate would have meant a huge reduction in imports and tho buying public could not possibly have paid 15 or 20 per cent, additional on all imported goods, he said. Tho high rate would work as a tariff wall and the effects would have been disastrous, especially in the case of Britain, which bought practically all tho Dominion's produce.