EFFECT OF HIGH EXCHANGE

Timaru Herald, Volume CXXXVII, Issue 19372, 22 December 1932, Page 6

EFFECT OF HIGH EXCHANGE

IMPORTED GOODS DEARER. Although Americans may find some satisfaction in contemplating the increased number of pounds sterling their dollars will now' buy, there is another side to the picture which must become increasingly prominent as time passes on. This is the adverse effect on America's export trade caused by the high exchange (says the “New Zealand Herald”). For some months a number of lines exclusively of United States manufacture have become practically unsaleable in Auckland, due solely to the fact that the adverse exchange, on top of the ether charges, such as customs duty and freight, has raised their landed cost to prohibitive levels. Some importers have intimated that as soon as existing stocks are cleared they will not deal in such goods until conditions become more favourable to the New Te aland buyer. An example of the effect of the high exchange is afforded by a comparison of the cost of a wireless set, valued at 100 dollars in the United States, taking the current conversion rate and par. At the current rate of 3.18 dollars to the pound, the importer would have to pay approximately £3l 8s lid in the purchase of the set. compared with £2O 12s 4d at par. Freight and insurance charges would account for an additional £4 14s 3d, as against £3 Is lOd; exchange would absorb £4 0s 4d, compared with £2/12/8; and customs duty and charges would total £l6 2s Id. compared with £9 17s lid. By the time he took delivery of the set the importer would have incurred a liability of £56 5s 7d. Were the exchange at par, the total cost would be only £36 4s 9d. Another example is provided by a light motor-car costing 500 dollars in the United States, or about £lO3 at par. Before delivery of the vehicle could be taken in New Zealand, the importer would have been obliged to pay exchange and charges amounting in round figures to £lsl, bringing the landed cost to about £3OB, against £202 at par.