DOLLAR RATE OF EXCHANGE

Otago Daily Times, Issue 26027, 15 December 1945, Page 7

DOLLAR RATE OF EXCHANGE

CONSIDERED REASONABLE (N.Z.P.A. Special Correspondent) LONDON, Dec. 13. Among many points made by the Chancellor of tne Exchequer, Mr Hugh Dalton, in his speech, was that the acceptance of Bretton Woods did not mean a return to gold or anything like it. “It is quite a different order of things altogether,” he said. “We shall go to Bretton Woods with the existing 4.03 dollar rate of exchange. My advisers are satisfied that this is right. It is not too high or too low in relation to the probable course of events. That figure seems to us at present to be a reasonable rate, but if we are wrong we are not bound for ever, and that is the whole of my argument. “ We can retrieve our stakes in this new and more flexible world of Bretton Woods in a way which was impossible for the Leader of the Opposition to do in the days of the gold standard. The value of sterling was held in narrow limits, and only a very narrow fluctuation was permissible. But if any variation should become necessary, the Bretton Woods agreement provides for four successive possibilities of variation. “First, we or any other member of the fund may change the par value of our currency by 10 per cent, merely by notifying the fund. We could mark down the sterling-dollar rate of 4.03 to 3.63 without any interference by the fund. “ Secondly, having done that once, there is the possibility, provided the governing body or fund agreed, of a further 10 per cent, variation in either direction, and if a request for a further variation were made by any one member of the fund a reply would have to be given within 74 hours. This would enable a further reduction of the dollar rate to 3.22. “Let it never be forgotten, when we speak of getting the consent of the fund, that we are going to be there. The United Kingdom will be represented there, and also the dominions. ■ “Thirdly, further changes over and above this 20 per cent, might be made, again with the consent of the fund, but here there is no time limit for the answer. “Fourthly, under article 15 of the Bretton Woods agreement, any member is free to resign from the fund immediately on giving notice, and without penalty. He could even get back his own subscription. “ On resignation from the fund the resigning country recovered full liberty to vary the value of its currency without limitation at all, and without any further consultation.” Mr Dalton said he was pointing out this, to those who said Britain was going into the agreement bound hand and foot. She was. in fact, going in with considerable elasticity.