INCREASE NOT LIKELY

Southland Times, Issue 23650, 27 October 1938, Page 3

INCREASE NOT LIKELY

Australia’s Exchange Rate RESERVE OF LONDON FUNDS The usual spring rumours that the Australian exchange rate is likely to go up have been heard again in Melbourne recently. They are baseless, states The Herald, Melbourne. Every year about this time rumours about the exchange rate have been current. The rate has been held by the Commonwealth Bank unchanged at £125 Australian equals £lOO English since the bank took charge of it in 1931. This year, figures of 130 and 135 have been spoken of. There is nothing in it. The rate is determined mainly by the supply of funds in London and the demand for them. The supply has been diminished recently by low prices for exports, while the demand for imports has been high. But the reserve of London funds, held specially by the banks to meet such fluctuations, is strong.

No move'would be likely unless conditions became far more adverse than they are today and continued without signs of improvement for a long period. In June 1937, London funds were up to post-depression peak of £71,000,009 sterling—double the depression figure. In 1937-38 imports rose by £20,000,000 sterling, and exports fell by £5,000,000, but there was an inward flow of capital, and £7,000,000 was borrowed by the Federal Government in London, mainly to strengthen both bank funds. London funds are therefore still over the £60,000,000 mark. The export season is just beginning; imports will fail under the influence of reduced spending power, reduced plans for company expansion, and the high position of traders’ stocks.

There are signs of revival in the United States, which might mean better prices. So the bank is certain to hold the rate steady and continue to watch the position, without'considering any move this season.

MINING RIMU DREDGE (United Press Association) HOKITIKA, October 26. The Rimu dredge return was 2930 z for 131 i hours and 49,555 yards. THE BUTTER MARKET QUIET TONE IN LONDON LONDON, October 25. The butter market is quiet. Quotations: New Zealand choicest salted, 114/-; unsalted, 115/-. Australian salted, 110/-; unsalted, 111/-. THE PRICE OF GOLD LONDON, October 25. The price of gold is £7 5/11 an ounce.