Lower Exchange Rate Will Enable More Goods To Be Sold Abroad

Chronicle (Levin), 19 September 1949, Page 5

Lower Exchange Rate Will Enable More Goods To Be Sold Abroad

(N.Z.P.A.-

—Reut&f. i

ANNOUNCEMENT BY THE CHANCELLOR

Ootoyriaht)

Received Monday, 11.5 a.m. LONDON, Sept. 18. The British Government has -devalued the pound sterling, which from now on will be 2.8 dollars. The Chancellor of the Exchequer, Sir Stafford Cripps, made this announcement tonight in his broadcast. The previotis rate was 4.03 dollars. Sir Stafford said that the official price of gold would be adjusted accordingly. The International Monetary Fnnd had approved the new rate.

The Royal Proclamation to be published in the London Gazette tomorrow will provide for the clos*ing of banks and the stock exchange tomorrow. The Chancellor said that with the lower rate of exchange, Britain could sell more of her goods abroad. The change did not concern the internal value of currency. Prices in the shops would in most cases remain the same, because the internal value of the pound had not altered nor had the value oiysavings altered. Sir Stafford said that Belgium, Switzerland and Italy would not change their existing rate of exchange to the dollar. Sweden and Denmark were uncertain, and France had not yet decided. Sir Stafford said that Austraiia, New Zealand, South Africa, India and Ceylcn were expected to follow Britain's devaluation example. Although Britain's decision had been taken before he and the Foreign Minister, Mr. Ernest Bevin, had left for Washington, it had not been announced at that time because Britain desired to tell America and Canada first and inform all members of the Commonwealth. "This step I have announced is the most serious the Government could possibly take. We are taking it because our present sterlingdollar difficulties are, we believe, otherwise insoluble." Sir Stafford added that one reason for fixing the new rate of exchange was to stop the drain on Britain's dollar reserves. It was

esscntial to fix it at a rate which Britain could hold. Unless she earned enough dollars there would be lower standards of living and widespread unemployment. Britain had been running the most serious risk that her dollar earnings would not be high enough to maintain the flow of essential imports and the present standard of living. Britain's reserves were so low that this change in the dollar rate of exchange was the only wav to get prices down quickly enough. He had hoped that this would have been unnecessary.