RAISING OF EXCHANGE RATE

Timaru Herald, Volume CXXXVII, Issue 19523, 24 June 1933, Page 18

RAISING OF EXCHANGE RATE

BANKER’S OPINION. BENEFIT LOST TO PRODUCERS. Special to " The Herald " WELLINGTON, June 23. Referring to the rate of exchange, at the annual meeting of shareholders of the Bank of New Zealand to-day, the chairman, Mr R. W. Gibbs, said:— "In January last, after lengthy negotiations with the Government, the Associated Banks consented to raise the rate of exchange on London from 10 per cent, to 25 per cent., a condition being that legislation would be put through indemnifying the Banks against any loss, due to a change in the rate which the Banks still could not advocate, thus throwing the entire responsibility on the Government. "At our 1a..; annual meeting, the chairman remarked:—‘lt is certainly not the business of the Banks to adjust exchange rates to meet variations in the price of produce. Nor can they be influenced by the rates prevailing in other countries which are our principal competitors in the London market. Neither the Government nor the Banks could view with equanimity the heavy depreciation of New Zealand currency which would result from any considerable increase in buying rates on London.’ “This expression of opinion was the carefully considered view taken by your Board at that time, and nothing has transpired since to warrant any modification of that opinion. “As a counterstroke, our chief competitor, Denmark, soon followed suit, the kroner being quoted about 22.4, which in relation to sterling is about the same as thL New Zealand pound. France also, to offset various depreciated currencies, has imposed a surtax of 15 per cent, on South African and New Zealand imports. “Retaliation of this nature which might reasonably have been expected, destroys much of the anticipated benefit to be derived by the primary producers from a high exchange. To what extent the reduced limits of the wool buyers may have been influenced by the exchange, it is difficult to say.”