EXCHANGE RATES

Evening Post, Volume CIX, Issue 42, 19 February 1930, Page 12

EXCHANGE RATES

COMMEECIAL VIEWS

PRICES MAY BE RAISED

L\ening Post ' 19tli lcbiunj

■ Exchange rates having now moved to '• .. 3 1-8 per cent.'-against''New'Zealand—and ' it is a Question, whether they may not ': go even higher—the importing section o£ v : ' the community is naturally perturbed by : the increase. In simple terms the change means that £100 worth of goods imported ;' -will cost £103 2s 6d to-land. Wifi "this '.' ■ additional cost of imported goods be passed ■ on to the consumer? It seems inevitable that.it will, together with the 2 per. cent. :> primage duty, making sjbods cost at least : -5-per .cent. more. Some commercial views ; : : on the high rates'of yxchange were sought

■:; by "The Post," and are given in brief /: hereunder. "AH (he time we have _-so i '■ many Australian bauks operating m .New ■■ Zealand," remarked the principal ot a :' large soft goods house, "wo cannot be dis- '-.■' s'ociated from Australia in the matter of i! • funds in London. Australia obviously '. • has no funds, or-.insufficient funds for her :■ requirements in London, and.- there is no -':' likelihood of the position being immedi- ,'. ■ ately adjusted by the flotation of an Aus- ' " tralian loan in London on reasonable

.■■ terms. That event would, of course, re- '■ lieve the position, but meantime adjust- • ' men); must be made by expeorts from -.-■• Australia and New Zealand. Unfortunately the main exports of-the two coun- '■.'•• tries-were seriously down in price, with a tendency, it seemed, to continuance of low values." -: ■.■■",: It was suggested that the increased ex- ■'.•■ change might be "passed on." . . ■■ "I don't think so," was the reply, be- ': cause stocks held in the, country are fairly heavy, and-there is really not much chance ■ - of 'passing it on' in the soft goods trade. ■ ■ There has undoubtedly been over-import- : ing during the past six months, and the " : high rates should restrict it- ——"

SOFT GOODS POSITION. "Of soft goods?".-., ■ ;'■ ' "Not bo much, so far as one can see. But there has been a. heavy importation of motor-cars. Importations of soft goods

: have been large, but • one would . not say ■ that there has been over-importation. The i values.of some items.of soft.goods, as you i can see in the abstract ot statistics, were ;j less in aggregate .for 192!) 'than for 1928. ! There were slight increases in furs, silks, : apparel, carpets, millinery, haberdashery, and Coots and shoes, and decreases in ' hosiery, laces and ribbons, general drapery, : woollen, linen and cotton piece goods." ; "If the. high rate of exchange continues, what do you think will,be the effect on , certain local industries?" ■ i '. "Undoubtedly they will receive an impetus, because the best way that we in -.' Nety Zealand can. meet' the position is to " provide funds in London by increasing our exports and simultaneously ouiimports, and doing the best with goods 1 which we manufacture in the Dominion itself, which are in competition with goods we also import. . "Competition .in business is so keen in .: New Zealand that the 3 . per cent, extra represented by the cost of bringing goods ■.■ here will make but' a (rifling difference : in their price, and will probably be borne ; by importers themselves." ; ' Another importer and warehouseman ' noi'iivthe soft goods trade thought that if the retailing public would be wise it would indent with the greatest care and dependmore than'ever upon the local merchant keeping stocks well down and drawing on the warehouse. No doubt the health of importing , position ... would improve ■ under the salutary influence of the high

exchange rate, but that would largely depend upon" the value and volume of exports —and prices for vropl and dairy produce were undeniably low. The exchange rates would have to be charged oh the goods. It •was;, added. "There js nothing to fear if 'people will keep- their imports down and live,' within. their" incomes."

THE AUSTRALIAN NEXUS. '

Another view was to the, effect that; if 'iihe.whole;.of' the-, banking, business of the iipjiiinion was done by the two New Zealand banks, the Bank of New Zealand and the National Bank of New Zealand, then ■'''this Dominion would not necessarily have ■4o'follow. Australia in regard to funds in •London. . If New Zealand had sufficient Tftihds of its own there to meet the pre- ' sent position then the increased rates •would not necessarily apply; but the facts ' as they are had to be faced and the connection- between the banks of Australia and New Zealand was exceedingly strong. New Zealand is governed by /Australia in this matter. The position would only be righted when realisations from exports of toth the Commonwealth and the Dominion provided, sufficient fundsvin London to '•'jpay'for; their "imports.' " • . . "Prices for exports, however, will have . to improve," it was added, "and there -■~ "does not "seem much chance of that at the ">' moment. Wool,-wheat, and dairy,pro- ": duce prices are still much below those at this time last year, with but lit- '■:' tie prospect of improvement. The best !; and the only way to: meet this position is * curtailment of imports and the current ; : rates of exchange should have this result. < Of course tjie revenue of the Dominion .{■ through the Customs will be affected by v this reduction,'in. mipo'rting, a point, no ' doubt, that has" not escaped the attention ;: of the Government.-. ,i But it should not « be used to increase tjte already ■ overbur- '■: derisome taxation/in Hnany other direci'. ■ tions." '