B—l6

New Zealand's Dollar Deficit: Calendar Years ($(U.S.)millions)

During the first quarter of 1950 there was a substantial improvement in New Zealand's dollar balance of payments. This was true also of the whole sterling area, due in part to the devaluation of sterling in September, 1949, and in part to the maintenance of a high level of business activity in the United States, which brought about a strong demand for imports. During 1950 New Zealand's dollar deficit is likelv to be reduced, owing to increased exports to the dollar area of wool, sheep-skins, and pelts,- and to the economy which is being exercised in dollar expenditure. However, New Zealand will still incur a considerable deficit in dollars, and the need for careful economy in the use of dollars has by no means been removed. AMENDMENTS TO EXCHANGE CONTROL REGULATIONS On 9th March, 1950, the Government announced certain amendments to the exchange control regulations in force in New Zealand. The amendments consisted of the following : —- (1) An amendment to Regulation 6 of the Finance Emergency Regulations 1940 (No. 2) giving the Minister of Finance power, by notice published in the Gazette, to exempt specified foreign currencies from the requirements of that regulation. Such power already existed in Regulation 7in respect of foreign securities. (2) A notice published in the Gazette on 9th March, 1950, to the effect that — (а) The taking, transfer, or sending of sterling area securities from New Zealand without prior approval was no longer prohibited. (б) Sterling-area currencies were exempt from the requirement that foreign currencies (notes, postal notes, money-orders, promissory notes, bills of exchange, and free bank deposits) should be offered for sale or assignment to the Reserve Bank, and that fixed bank deposits should be declared to the Reserve Bank. (c) Foreign securities domiciled in the sterling area were exempt from the requirement that they should be declared to the Reserve Bank. (d) Holders of sterling-area currency or securities could in future sell, transfer, charge, or otherwise deal with them with greater freedom without obtaining the prior consent of the Reserve Bank. (e) The power of the Government (which it had never-used) to acquire foreign currency and foreign securities compulsorilv no longer applied to sterling-area currencies or securities. (/) The exemptions granted did not apply to foreign securities or currencies held by the six New Zealand trading banks.

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— 1947. 1948. 1 1949. Exports 37-0 35-2 29-6 Other receipts 5-8 4-8 3-4 Imports 118-0 74-2 72-3 Other payments 9-5 9-2 13-3 Deficit 84-7 43-5 52-6