EXCHANGE RATES ON WOOL

Waipa Post, Volume 42, Issue 3269, 7 March 1931, Page 8

EXCHANGE RATES ON WOOL

The confusion in the minds of many members of the wool trade on the question of exchanges has been re- ' vealed by the fluctuations seen during the past few months in the ratio between the currencies of this and other countries (says the Bradford correspondent of the Sydney Morning Herald). Bradford buyers of wool in South America have' had a distinct advantage in this respect, though unfortunately this has reacted very much to the loss of New Zealand pastoralists. Bradford firms operating in New Zealand have naturally not been prepared to pay any more money in their own currency than they would if operating in Buenos Aires. The state of affairs which has developed in Australia is similar in some respects, though fortunately it is not calculated to bring with it the same disaster to Australian pastoralists as befell those in New Zealand. As an indication of the straitened financial position of Australia, the increase of the exchange rate is I bad news. According to one authority, for the purpose of paying interest and service upon the Australian Commonwealth and State debt to Great Britain, the Federal Loan Council requires about £35,000,000 per annum, and if the Australian pound is quoted at 10 per cent discount the debt cost for Australian taxpayers is £3,500,000 more per year. - The resources of the Australian banks have, however, been affected by the IoW price for Australian products, notably wool. So far the facts seem to be against Australian interests, but as a far-sighted move the increase in the exchange rate seems to be quite justified. British importers are naturally concerned in the effect which the increase iii the rate will have upon their purchasing power in Australia, and the position is that, while the depreciated Australian currency is a bad thing for the Government, necessitating the finding of an increased amount of money to meet external payments, the importers of greasy Australian wool from Sydney and Melbourne will be able to land it at U per lb less, as they are paying all their drafts at sight. This does not imply the payment of any less money to the Australian grower, and for a period at any rate it seems quite possible that we shall see fully firm values for wool in Australia without any advances for tops in Bradford.