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EFFECT OF DEVALUATION OF POUND STERLING ON N.Z. CURRENCY

Rumours about the possible devaluation of the pound sterling have gained some ground lately, and more than passing interest has been shown, in the likely effect of any such move. In view of the fact that New Zealand’s currency is tied directly to sterling, any such development would; have an immediate effect here. If sterling were devalued, for example, in terms of dollars, it would mean that sterling would be worth fewer dollars, and automatical!? the New Zealand pound would also purchase fewer dollars. In other words, United States goods would be dearer to buy in England and here, while English exports to the United States would be cheaper there. The effect would be to discourage Imports from the United States, and encourage exports to that market; it would make for a freer flow of goods from the sterling area to the dollsarea. 25 PER CENT. EXCHANGE. If sterling were devalued, there are two things New Zealand could do. One would be to leave the present rate of exchange £loostg. equals 1125N.Z. and let the dollar rata swing; or we could alter the exchange rate with England so as to appreciate our money in terms of sterling. In the latter event the dollar exchange rate with New Zealand would not fall so much. As against that, of course, is the fact that New Zealand is infinitely more concerned with sterling trade than with dollar trade, so that any interference with the existing exchange position with sterling may be ruled out. Internally the only effect of a devaluation of sterling would be that goods purchased from the dollar area would be dearer, and that would be reflected in increased costs. With the dollar position as it is today, it would, of course, be an added discouragement to buy in the dollar countries. As is pointed out in the London “Financial Times,” however, no Government contemplating a change in the value of its currency “would be foolish enough to advertise its intentions in advance. . . . (See further cable news this morning).

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Permanent link to this item

https://paperspast.natlib.govt.nz/newspapers/WC19480117.2.33

Bibliographic details

Wanganui Chronicle, 17 January 1948, Page 4

Word Count
347

EFFECT OF DEVALUATION OF POUND STERLING ON N.Z. CURRENCY Wanganui Chronicle, 17 January 1948, Page 4

EFFECT OF DEVALUATION OF POUND STERLING ON N.Z. CURRENCY Wanganui Chronicle, 17 January 1948, Page 4