EXCHANGE POLICY

Evening Post, Volume CXIII, Issue 3, 5 January 1932, Page 10

EXCHANGE POLICY

A REPLY TO "TOUCHSTONE1

t The assertion by "Touchstone;" of the •Sydney Morning Herald," that the NewZealand' Government has taken upon it the right to fix exchange rates, as. reported in these columns yesterday, is countered by a Wellington authority, who stated in the course of an interview that it was^ obvious that some of "Touchstone's" statements were quite inaccurate and if allowed to pass unchallenged .would be detrimental to the credit of the Dominion. The fact that "Touchstone".; had stated in no less tlian four places that the rate of exchange would be fixed by the Government considerably discounted his views. Clause 7, sub-clause I. of the Order-in-Council" provided that "the current rate of exchange at any time for the purposes of this order shall be the;rate q-iotcd by the banks .-of-issue doing business in New Zealand," and "in the case of any question .as to what is the rate so quoted, the Minister of Finance may, for the purpose of this order, after consultation with the banks of issue, declare such rate by notification published in the 'Gazette.'" There was no ambiguity about the clause, and it was possible to interpret it. in one way only. It defined the meaning of the phrase "current rate of exchange," previously referred to in the Order-in-Council, and if any dispute arose as to the meaning of that phrase the Minister of Finance was merely given the requisite power to act as arbitrator. It was clear beyond any doubt that the Order-in-Council did not give the Government power to fix the rate of exchange in consultation with the banks or otherwise, and it was evident that the rate of exchange would be governed as usual by the inexorable law of supply and demand.