CURRENCY RELATIONS

Otago Daily Times, Issue 22354, 30 August 1934, Page 9

CURRENCY RELATIONS

AN IMPERIAL PROBLEM INVESTIGATION URGED LONDON, August 20. (Received August 29, at 9 p.m.) Expressing the opinion that the Australian and New Zealand currencies were now undervalued in terms, of the pound, the Financial Times says: “ The recent expansion of the exports of dairy produce tends to support this view, but •it is difficult to believe that Australia and New Zealand would consent to their currencies ceasing to be undervalued, even though they are accumulating heavy sterling balances in view of the necessity of competing in the British market, not only against the British farmer but against Denmark and some . South American republics, while seeking also to establish their own industries. They can justify the accumulation of their balances by pointing fo the contraction of loans from the London market and the need for building up adequate drought reserves. The danger is lest, in the event of further development of British agriculture and a curtailment of.imports from the dominions, they may be tempted to depreciate their currencies as an alternative to further protective measures, which would conflict with the Ottawa agreements. Our agreement with Ireland arid New Zealand had not been in force six months when the New Zealand pound depreciated. It was significant, that Denmark immediately countered this move.” The editorial insists that the question of Imperial currency relations should occupy a leading place in the agenda when the Ottawa agreements are reconsidered or (he Empire Prime Minis! ers meet. “ It would be useless to fix a tariff by mutual agreement if the exchange rates are free to vary. It is time the question was investigated in advance by a representative body of experts from Great Britain and the dominions,”