THE EXCHANGE RATE.

Star (Christchurch), Issue 12761, 3 October 1919, Page 8

THE EXCHANGE RATE.

GOST OF LIVING AFFECTED.

PROHIBITIVE AMERICAN PRICES.

The rates of exchange on the world’s markets are claiming serious attention at present. It is thought that eventually the law of supply and demand will bring the rates back to normal, but it is pointed out that America had, for the twelve months ended July last, a balance of trade to her favour amounting to £750,000,000 sterling. With the exception of those of the chantries which did not take part in the war—Switzerland. Holland ana Spain—ail the European exchanges fire now in favour of the United States. .When the war broke out in 1914 it had the effect of lowering the value of the dollar compared with the pound sterling. The exchange went as high as seven dollars (29s 2d) to the £l. England had, however, to concentrate her efforts on winning the war, to the detriment of her exports of manufactured articles for the world’s markets, whereas America was doing»a big export trade in the first years of the war. The balance of payments rapidly veered round in favour of the United and the latest exchange rate is 4.17 dollars to the £l. Eastern trade is similarly affected. These developments have, of course, had»a considerable effect upon the local market. It was found, for instance, that although contracts were entered into at a certain price, the cost to the purchaser at the time pf execution ot the contract was considerably higher, on account of the rate of exchange having altered. Most local buyers now get their goods from America on a fixed rate, which gives rather more stability to the trade. ‘‘The exchange rate is always fluctuating, ’ said a local banker to a representative of the “Star” to-day. So long as we have a large import trade with America the balance must bo largely against' New Zealand. Exchange with India is just'as bad They have been supplying the world’s markets with jute goods, and practically nothing is going back to them. This means increased price of commodities. Until we export more and oven up the balance of trade, the rate of exchange will not come back. Of course, the law of supply and demand will probablv operate. The high rate of exchange will divert trade from the countries where it is unfavourable to others, provided that those countries arc able to supply the goods needed. Such countries could actually charge about 4-J per cent, more than that charged on the normal bams of exchange ana yet supply them cheaper. It is goizm to be a, good thing for British trade—it Britain s industries are well maintain- . Considering the present state or that does not £e m „ ° Jlf "■? BM . tln *, a fearf >' l lot- of Stud from America, because the Americans can supply the goods, and America a hTfl T rket V And £750.000.000 s a big balance to reduce.” „f?«t»"tk w SISS* fAsrM-j'rr l ! extent primary products. Tho CO K hardware, oils etc ..a . , v v, 1 «H. that of V&caV ift.*’ 0 ” 8 don-fthlS [' i nd “'SonEfto tee special cases are being made in font a shipment of SofiST. America" intending to purchase goods in Am ' hnu w,tli . the .Proceeds. In that casT however, he did not get tb* ~ a^’ Vn . t i\r er 00,11:1 be Stored.” ° Ur irade fbinrr f are absolutely ordering nothing from America,” said fb« i a local hardware importing firrj -ot course, there are i i* *, . * we «. ttyJS fc SiS 6 W very little, and we are t , CXIX)r f I "? devil and the deep blue sen. 'lf°thiims continue as thev are gome tW* • g question that there Id ? 2 f n ° shortage in certain lines and will go up. TurponS’eS/K America alone. To-dav the 1 ™ about 12s 6d a gallon. I \ S anyoody is wanting any JtHiJ nk Fencing wire and corah ted }™tK R o f nro imnortS* ” holding off to-dav. It is nil a onTi" '' porting firm. “We cannot do with' out American stuff, but we are cuSn mg onlers as much as possible Ant thing from lej per cent to 17 nnr go^s" S pnt °° I s *-* ef 3

tW +v" otlip;r q " f art * r , ™ Stated P nco °f woolpaohs and hi to Twl iU ¥***s almost nrohihitiro Jncsc come from India nnd vat aS S’S rate of exchange has been fm qoently discussed by the local ChnmW of Commerce, bnt so far nn iafil'i decided nnon. It' probable that the matter will C tes. *• the tij