IMPORTERS’ ADVICE

Taranaki Daily News, 19 November 1934, Page 14

IMPORTERS’ ADVICE

LAST WORD ON HIGH EXCHANGE. “MAKE THE BEST OF IT.” Advising importers to make the best of a bad position, the New Zealand Importers’ Federation in its annual report delivers a final thrust it the high exchange policy of the Government. The executive, m a report which will be presented at the annual meeting in Wellington to-morrow, recalls that it devoted considerable attention to the exchange rate issue, its efforts being directed toward endeavouring to induce the Government either to abolish control and thus allow the rate to iach its natural level, or to reduce the rate gradually. The federation published figures showing that the estimated cost of controlled exchange for the :■ ear ended March 31, 1934, was £12,723,000. In the light o c the information which the Minister had since given to Parliament, it was clear that the estimate was approximately correct, but the Government refuse I to face the loss on accumulated sterling held in London. The present position was that the Reserve Bank, had purchased London funds from the Government by crediting it with an equivalent amount in New Zealand currency, with which the Government had retired Treasury bills held by the trading banks, but it must be borne in mind that the Government, guaranteed the Reserve Bank against loss on sterling thus purchased. Thus, the evil day when loss,must be aced was merely postponed. It appeared that a heavy loss would be avoided only if imports were so heavy over the next two or three years that not only would payment for it absorb all sterling created by current exports to London, but '.lso make heavy inroads on the £25,000,000 sterling (approximate) in the hands of the Reserve Bank.

The executive agreed tha; imports for the current year were likely to show a considerable increase over the imports for the year ended March 31, 1934, but it was of the opinion that goods could not profitably be imported to the extent evidently anticipated by the Government in the face of the heavy handicap imposed by the 25 per cent, rate, plus Customs duties. The federation did not overlook that' New Zealand required some £8,000,000 sterling per annum in London for debt service. The executive realised that by reason of the decision of the Reserve Bank, exchange would remain at the present level for a considerable time, and considered, therefore, that it was useless to pursue the argument further. Importers must consequently continue -o make the best of a bad position.