DECLINE IN N.Z. STOCKS

Southland Times, Issue 23675, 25 November 1938, Page 5

DECLINE IN N.Z. STOCKS

RISE IN DISCOUNT RATE IN LONDON RESERVE BANK’S REDUCED ASSETS (United Press Assn.—Telegraph Copyright) LONDON, November 23. The Daily Mail says that New Zealand stocks, which have been increasingly weak since the re-election of the Labour Government, showed a further fall of up to £1 and Mr Savage’s statement that he would not decrease expenditure unless wages were reduced has not allayed the fears aroused by the Government’s social expenditure programme.

The city editor of The Times, commenting on the rise in the New Zealand re-discount rate, points out that the precise consequences are difficult to gauge as there is no rigid link between the Reserve Bank and the commercial banks’ rates on loans and overdrafts, but presumably it will immediately affect the rate of New Zealand Treasury bills. The Times adds that the basic reason for the action is presumably another reduction in the Reserve Bank’s sterling funds since the exchange adjustment on October 21. Assets have fallen during the four weeks ending November 14 by £3,456,000 (New Zealand currency) compared with £1,033,000 for the corresponding period in 1937, the year’s drop amounting to £11,000,000. “The Reserve Bank adopted the traditional practice of raising the rate with the expectation of stemming the drain and attracting money back to New Zealand.”