CREDIT TROUBLES

Poverty Bay Herald, Volume LV, Issue 17227, 5 April 1930, Page 16

CREDIT TROUBLES

IMPORT CHECK IN AUST. DEMAND TOR DRAFTS SYDNEY, March ::.">. I'lvving to the aen I of drastic cm'(ailment of imports, in order to proson e Aus' i-aiia u I'uiub a broad, !he associated hanks have taken an unprecedented ■ otirse in raising their selling rates for draft- mi ' don b\ ;7.-, Or) per cent. Importers have had to ;a ok a tray out. I hiring the lasl Ie ,\ months exchange rate-: !ia \ e bounded up every we, k or so, Loudon credit has been rationed, ami the large importing houses have had to look elsewhere for their accommodation. They have naturally turned their attention to exporting agencies who have no use for the t i edits established on I heir account in London. One large exporter of primary produce to the United Kingdom .and the East said thai for weeks he has been inundated with requests for the transfer of London credits. Drafts were sold at' .&> per cent. premium, or 17- (id per cent, above the then ruling bank rales. Business was reported elsewhere uu the basis oi ,f.o H)x per cent, premium. SHARES fob TRANSFER English and American agencies thai have been anxious to retail, credits abroad have approached share brokers with a view In buying stocks on the Sydney nuu'kc; in cases where register, ami then shipping the scrip to London for sale there. Unt'ort unately, from the importers' viewpoint the number of stocks so transferable is .strictly limited, and if business of that character was to develop to any extent il would result in substantial appreciation of these shares in Australia, with the added risk of loss on their disposal in .Loudon. Transfer of credits by thai means may prove extremely costly.

Ex porters, however, are reaping' considerable benefit from the exchange situation. On each bale of wool shipped at present, exporters derive an advantage of Ms S,| a bale based on the average price of CI- a bale. It' flic woo! was line merino, the gain in exchange would range from LT- to 30s a bah'. Wool buyers in Sydney work on letters of credit, but the money is actually paid in London, the transfer being a book entry.

Duller shippers are lie inditing to I he extent, of more than C-S a ton for every lon of butler shipped abroad, the exchange gain being equivalent lo about Id a lb.