RAISED EXCHANGE RATE

Taranaki Daily News, 21 January 1933, Page 9

RAISED EXCHANGE RATE

EFFECT ON THIS YEAR’S BUDGET CONFIDENCE OF THE GOVERNMENT .. a © ; r- \ - ' STIR CREATED THROUGH DOMINION (By Wire— Parliamentary Reporter.) % Wellington, Last Night. FULL weight has been given by the Government to the possibility that it might have to provide large sums in London to maintain the exchange rate at 25 per cent., according to confident statements made by both the Rt. Hon. G. W. Forbes and the Rt. Hon. J. G. Coates when the question was referred to 'them to-night. They stated that the Government in giving its guarantee to the banks to indemnify them against any loss that might be incurred on the sale of exchange purchased at the new rate had gone thoroughly into all aspects of the responsibility it was shouldering, and that it was of the opinion it woqld be able to meet any demands made on .the Consolidated Fund for the purpose. Although it is admitted by the Government that the immediate effect upon the Budget of the increase in the exchange rate will be considerable, it is not divulged to what extent the Government might have, to provide funds for the purchase of accumulated credits in London. It was stated to-day that before reaching its agreement with the banks the Government had gone thoroughly into the position, and a fairly close estimate of what might be required to maintain the high rate had been reached. The; expectation is that a large sum. will be involved over the .complete year, and although the Cabinet is optimistic about-tile possibility of being able to meet all requirements ,in order >to indemnify the.-banks, one prominent financial authority when asked .for an opinion was not prepared to acknowledge that this could, .be done without a heavy drain being made upon the State-finances.