EXCHANGE EFFECT

Taranaki Daily News, 26 November 1934, Page 7

EXCHANGE EFFECT

LOSS TO OVERSEAS LENDERS.

COMMENT OF MERCANTILE FIRM.

By Telegraph—Press Assn. —Copyright. London, Nov. 22.

At a meeting of the shareholders in Dalgety and Company the Hon. E. W. Parker, who presided, said that since the depreciation of Australian and New Zealand pounds the cost of remitting funds to London for the company’s general purposes had reached £304,814. “I realise that the depreciation of the pound has helped the hard-pressed primary producer and that the help afforded him reacted favourably on the company’s earnings,” he said, “and therefore the money spent in remittances cannot entirely be regarded as a loss. But there is this difficulty: The company s capital is largely invested in financing clients’ properties. This money has been borrowed here and remitted overseas at par exchange, or a difference of a small margin. The interest rates obtainable on these capital sums has been reduced in recent years, both compulsorily and otherwise, to such a figure that it is equivalent virtually to the borrowing rate here and therefore has ceased to be profitable. This affects profits adversely and is a burden we may expect will remain for some time.”