N.Z. Currency Restored To Parity With Sterling

Chronicle (Levin), 20 August 1948, Page 6

N.Z. Currency Restored To Parity With Sterling

Press Association)

(Per

WELLINGTON, August 19. Mr. Nash, at the end of his Budget speech, announced the restoration of New Zealand currency to parity with sterling. Mr. Nash said there was a disequilibrium between prices in New Zealand and those of other countries, particularly the dollar area. Unless correction measures were taken immediately, this disparity would gTOw. • ¥ The exchange rate was altered during the depression and the time had come to restore New Zealand currency to sterling parity. The House was taken by surprise by Mr. Nash's announeement : which had been a jealously guarded secret.

Mr. Nasli said: "Whilst the subjects I have mentioned and adjustmeuts proposed are of importance, there is an-i other qiiestion to which coilsideratiou must i)e given. If members will examine the statistics that are available, it will be found that there Jis a dis-. equilib.riuin lietween New Zealand prices and those prevailiug in othei countries. The latest analysis suggests that unless corrective measures art taken, this disequilibriuiu and disparity will grow. If the income of ouf eoiintry is to be equitably sliared — as every oue agrees it should be— we must bring costs down and action to do so must be immediate. When in 1929-o.'t the f all in overseas prices jeopardised the primary production industries in this country, it was in general agreed that soine action was necessary to niaiu tain thein. Whelher the actual cours^ followed was uise or otherwi.se, is de batable but it was decided to depreciate the New Zealand rate of excluuige to tUi!.") N.Z. to CKK) sterling and that rate, • kas been operating up to the presenl time. "The present comparative .index ligures suggest tluit an adjustnient in the rate is now warranted and necessary. After exaniinlng the wliole posi t'ion it had been decided to appreeiatc our currency from the present rate oi £1l'.") N.Z., equalling £100 sterling, to parity with sterling and the new rafe will operate at onee. "With regard to primary producers. the Government will, if desired', negoti ate tlie guaranteed price procedure to cover their costs." As M r. Nash approached the end o, his statement it was punctuated b,\ jc\ eral comments from Opposition nieni bers. Alr. Goosman: (iood old l.eft wing. NI r. iShand:^ "i'on won't get auy farmers' \utes that wav. • Mr. Ilolhind (after .Mr. Nash had sal down aniid heurty applan.se from prac tically all Government members): "Sf on won't get morc production by cutti'ng the farmers' income -.3 per cent. mr. nash sees benefits "It is our own airair. but we would not have done anytliing that would be harmful tp Britain. Appreciatioa would be beneiicial to Brilain becau.se it would rediice the prices 1'or he. exports oii the New Zealand luarket, ' udded .M r. Nash. , Asked liow io'ng tlie mbve had been jinder cons'uleration, Mr. Nash said n had been conteniplated for sonie timi' but a final decisiqn was reacdied b. Gabinet af li.40 "tOnight. "There ivas very littlo time left wlien the deeision, was conveyed to caucus where it waunaiiiiuously approved. ' ' i'ractically no persons outside Gabinet kne'w of tio deeision — only tlie niinimum iiumber of otHcials required to implement it. New Zealand 's dollar exchange rate would now be 4.0:! instead of :!.£. Asked if his Budget ligures had been liased 011 the new rate, .Mr. Nash replied in the liegative. Wluit ad.justmeut would be required he could not yet say. (iovernment purchases would eertaiuly be all'ected lu.t iPslunild be remembered that several moiiths oi" the curreut yeai which the Budget dealt with, had at readv elapsed. Government i'unds iu London would be -i) per cent. better olV. This would mean a saviug — in ternis of New Zea'land currency — iu the serviciug of fc'ie overseas debt and in any fulure repa\•uent of con versioii operations. Soine of this year's iuterest eharges had. however, already been paid at tlie bM rate. .Mr. Nash reiterated that nothing could be done as i'ar as jiersous who had ilready bought goods or paid oversea-. [nissages 011 the old basis but he sai'l that as far as goods were concenied, there was plenty of time in which tn so J 1 them bel'ore eheaper goods arrived. N.ew Zealand manufacturers would lionelit to the extenf that mucli of theii raw materials was iniported while tli* linport lieeusing system could be useti ! o protect 'them where juslilied, against eheaper iniported goods.