EXCHANGE RATES

Wanganui Chronicle, Volume 89, Issue 224, 21 September 1945, Page 4

EXCHANGE RATES

Sir.—Can you explain to me why the N.Z. pound should be worth so much less than the English pound? Or isn’t it any longer And if so, is there any chance of the heavy exchange being taken off.—l am, etc., 1 am, etc., “PUZZLED.” The New Zealand pound was delibeiately depreciated by the Government. of the day to make £125 N.Z. equal £lOO sterling. Thus for every £lOO realised by the sale of export produce the primary producers were able to discharge their debts to the extent of £125. Thus if a debt of £5OO N.Z. became due the farmer could repay it with £4OO in money at Ike new valuation. Tl> lender was robbed of £lOO of valTe thereby. The lender’s loss was permanent, but the borrower's gain was temporary. Gradually interval costs moved up and eat. into the advantage gained by the exporter from this exproprietary action of the Government. (CoatesForbes).

The Labour Party’s plank was to bring back the exchange to parity with sterling. Last, year N.Z. accounts were completely transferred to the N.Z. basis of £125 N.Z. to £lOO sterling so apparently the present Government regard the task of returning N.Z. currency to its predepression level of value vice sterling as beyond it. The present favourable position of the exporter makes the present an opportune time for leadjustment insofar as they are concerned. From a political standpoint the readjustment of exchange is a remote possibility.—Editor.