EXCHANGE PROBLEMS

Evening Post, Volume CXII, Issue 80, 1 October 1931, Page 16

EXCHANGE PROBLEMS

LOSSES ON IMPORTS

Effects of England going off. the go d standard are now beginning to be fully jealised by New Zealand importersi oi *h« products and manufactures of other ■-n»ntpies The relation of the English Sore in New Zealand to-day than they were before the standard was departed %Z. Imports ■ from Canada are also affected.' Practically the exchange rate imposes a substantially increased duty on aKeign goods imported. Cancellation of orders of foreign goods (where that can be done) has been made. > Great Britain may benent, and it .is generally hoped that it will do so by the Sow value of sterling in some foreign countries where British product^ and manufactures already compete with foreign m this market. But the situation is still * The'cable lines are kept very busy to-day iv the transmission of advices withdrawing previous quotations or advising revised prices to meet the altered exchange conditions. For instance, some packers of sild, or sardines, in Oslo, Norway, have advised that although quotations for these goods had hitherto been made in sterling wivering insurance and freight, now the basis of gold exchange would be accepted *t 18.15 kroner to the £, the difference to be placed to buying account. With regard to Belgium arrangements show some variation. - Sterling prices quoted have been converted into Belgian francs at 110 francs to £1, and in another case new quotations are made in United. States dollars, and it is quite unusual for any firm to quote to New Zealand in a ioreiKn currency. .Other Belgian firms have withdrawn all quotations in the meantime, ■whereas they had been quoting in sterling. Again intimation has been given ol a willingness to accept new business at an advance of 20 per cent, on previous sterling quotations pending further, advices. Spanish and Portuguese wine prices are not expected to be affected for the present as the wine export trade of those countries.is almost entirety in the hands of English houses, but other products from Spain, Portgnal, Italy, and the Mediterranean countries generally will be affected. .'ln regard to the trade with the United States there is a great variety of contracts^ Some business is done on the basis of i dollars 80 cents to the £1 conversion rate fto the account of the customer and bank exchange between New Zealand and London also to the account of the customer. It costs 10 per cent, to remit New Zealand money to London at jiregent, and on top of that is placed cost of converting the English £1 into TJuited States dollais. Again some American houses have been naming prices C.i.f. and exchange on the basis of 4 dollars 30 cents to the £1, the difference between <t dollars 30 cents and the gold value of 4 dollars 86 cents being on account of bank exchange. In such cases the customer wit! be liable for the additional cost of concerting sterling into United States dollars. jj;hd further, some American exporters to Sew Zealand in a very big way of busiuqm, prior to the altered conditions ot exchange had been quoting fixel sterling nrices c.i.f. New Zealand main ports, the bank exchange between New Zealand and London being on account of the purchaser. In such instances the seller will lose the difference between the gold value and the present value of the £1, and those-losses ate expected to be heavy. Where a New. Zealand purchaser had bought American goodß in United States dollar currency and had sold S them in New Zealand currency to arrive the loss must also, be substantial in proportion unless the ratio of profits carried fay the goods will allow a rafficient margin to cover the loss by exchange.