TRANSFER OF FUNDS

Taranaki Daily News, 4 August 1934, Page 7

TRANSFER OF FUNDS

LONDON TO DOMINION. MARKET AGAIN OPENED. An instruction to the trading banks that the restrictions previously existing upon the transfer of capital funds from London to New Zealand at the current rate of exchange have been lifted has followed the notification of the adjustments in the rates of exchange by the Associated Banks on Wednesday. Restriction on transfers, other than legitimate trading transactions, has been in force in some form or other from a few months after the operation of tire high rates of exchange. Now that there is some stability in the exchange rate the banks are prepared to transact business as funds permit. Until the Reserve Bank commenced business losses on the trading banks’ accumulated surpluses were guaranteed under the Bank Indemnity (Exchange) Act, and to prevent speculative operations at the expense of the Consolidated Fund, the Government, with whom the banks were working • under an agreement, deemed that restrictions were necessary. Consequently some time after the rates were raised in January, 1933, an embargo was placed upon all transfers from London and Australia to New Zealand of proceeds other than those from the sale of primary produce and the exchange premium was not obtainable for anything in the nature of a capital transfer from Britain, such as a lottery prize, private remittances or similar funds. One effect of this was to develop an “outside” market in exchange which, while funds were available, flourished, and business to that extent was lost by the institutions which normally would have transacted it.’ More recently, however, the restrictions were waived to some extent by the Government and all sums up to £lOOO were acceptable for transfer to New Zealand in the ordinary course at the current rates of exchange. Larger sums, of course, while transferable benefited only up to £lOOO.

In the past some restrictions have also existed upon the transfer of capital'funds from Australia, but in this case the banks have acted individually, guided by the position of their own balances. A similar position will continue, but it is understood that no restrictions are now operating and the leading banns are transacting business normally. The alteration recently effected In the New Zealand rate on Australia was in consequence of the slight reduction of the New Zealand on London rates, which are now £1 lower than the corresponding Australian rates. To prevent arbitrage of exchange, or the opportunity for the transmission of London funds to New Zealand at a saving through Australia; or vice versa,' the “blocking" rate on Australia has been adjusted.