EXCHANGE RATES.

Press, Volume LXVIII, Issue 20489, 7 March 1932, Page 8

EXCHANGE RATES.

THE CASE FOR AN OPEN MARKET. COMMENT BY CHAMBERS OF COMMERCE. (PRESS ASSOCIATION TELEGHAM.) WELLINGTON, March 5. In a statement on' the report of tho Economic Committee on exchange the Associated Chambers of Commerce, through its president (Mr W, Machin) says: "The Committee has avoided the two questions of a low-pegged rate of exchange and an open market rate. The commercial community has for vears enjoyed the benefit of an open exchange market, which, it is fully recognised, has been steadied and preserved by the banks from violent seasonal fluctuations, and the system has on the whole worked satisfactorily to importers and exporters, and beneficially to the whole community." The Association reaffirms its opposition to pegging the rate of exchange high or low, and says it is in defiance of economic i law to prevent the exchange from finding its own level in the open market. "There seems to be a fear among' some of the leaders in the present controversy that the reopening of the exchange market would result in an artificially high 1 rate," says the statement. "If this did result, the contention the Association is that a high artificial rate should not be capable of being sustained. If the rate remained high in the Open market that should prove that a high rate was justified and necessary. If a high rate were not justified and necessary then supply and demand should bring the rate down. Supply and Demand. "If there is any justification for the fear that an open market would result in'an artificially high rate, the only inference to be drawn is that the market machinery which in the past -has fixed the rate according to supply and demand has broken down, and should bo replaced by new machinery. One new method that has been and which would protect the interests of the whole country is a central bank on lines of the Niemeycr Report, the bank to be charged with the duty of maintaining a stable exchange." • The Association expresses .the hope that the Government will revive the earlier proposals of the Association, which it is claimed, will secure to the Government its necessary funds in London, while still preserving a reasonably open market for exchange,