Thames Star MONDAY, JULY 23, 1934. THE EXCHANGE RATE.

Thames Star, Volume LXV, Issue 19162, 23 July 1934, Page 2

Thames Star

MONDAY, JULY 23, 1934. THE EXCHANGE RATE.

"With mallca toward* ttomi with charity for all; with firmneM in th# right* ms God give* ua to ■eo the rißht"--Lincoln.

The Reserve Bank does not begin operations till next month, but the board has thought it necessary to remove the uncertainty about the exchange rate by making a definite statement as to its policy. The exchange will remain at 25 per cent, and the bank "will aim at retaining the rate unchanged for a long period, linless there should be a marked alteration in the existing conditions." No one can. complain of any indefiniteness about this statement; it indicates that the bank intends to keep the rate at; its present level unless compelled by unforeseen circumstances to alter it. There never has been any real doubt about the rate being kept at its present level, because the reasons which caused it to be raised are still in existence, but those interested in a reduction kept the question constantly before the public in the hope of engineering a fall. There will now be no reason for importers to refrain from making purchases on the ground that the exchange may fall, and British holders of funds here will have no inducement /to keep them here in the hope that tney may lose less when they have to transfer them to England. The trading banks will be free to do what they please about their buying and selling rates, in the same way as arrangements are now made privately for the transfer of money to or-from England. The statement will increase the confidence of traders, by removing all uncertainty. Trade has been adjusting itself to the new conditions, and the position will be further stabilised. Arguments about whether the exchange should remain at its present level are now waste of time, for the Reserve Bank has stated its policy and is not likely to alter it.