EXCHANGE RATE

New Zealand Herald, Volume 81, Issue 25052, 16 November 1944, Page 7

EXCHANGE RATE

VALUE OF THE POUND

FINANCE MINISTER'S VIEW Referring to the exchange rate, the Minister of Finance, Mr Nash, speaking at the annual conference of the New Zealand Labour Party, expressed the belief that New Zealand currency was worth more than the British, or at least as much, and more than the American currency in terms of what money could buy. According to a rel){"t in the Standard, Mr Nash said the Government had made considerable research into the effect of altering; the exchange rate and the reports up to the present were that the difficulties ahead were so great that' it might not be worth while. 1

„ -V') v Zealand at present was paying nil ii l dollar, added Mr Nash. I hat dollar in the United States was not worth more, comparatively, than os. The latest figures available showed that it cost £2OO to buy in the United States food that could be bought in New Zealand for £IOO. The corresponding figures for other countries were:— Australia, £114; Britain, £127; Canada, £l7l. Under modern conditions, where exchange rates had been arbitrarily fixed, they did not necessarily have any relation to commodity prices and cost-of-living indexes. As the Dominion's exchange rate was based on sterling, the value of the New Zealand pound in relation to the dollar was determined by the relation of sterling to tho dollar. Since the rate of exchange on sterling was arbitrarily fixed at £I2")N.Z. to £IOO sterling, sterling values had fallen in terms of the dollar from 4.86 to the present official rate of 4.03. This meant a further increase in the price of dollars required by New Zealand. ,

At the moment, there did not appear to he any steps that could be taken immediately to remedy this position. Under the proposals settled at the International Monetary Conference atBretton Woods, New Zealand would have the right to fix its own rate of exehango, but this could not be done until the rate of the pound sterling in relation to the dollar had been settled.