EXCHANGE RATE

Evening Post, Volume CXVII, Issue 72, 26 March 1934, Page 9

EXCHANGE RATE

AUSTRALIAN POSITION

ALTERATION UNLIKELY

(From "The Post's" Representative.) ; SYDNEY, March 22. Despite speculations in. the London Press there is little likelihood of any immediate alteration iii the exchange rate as far as Australia, is- concerned. It is true that Australia-is building up a reserve fund in London, but this is necessary to, safeguards the position should Australia suffer a bad season. Australia, has 'had so many good seasons that people are-wondering how long they will last, and without being pessimistic-feel that Australia must be prepared for the inevitable. The question of Wringing the Australian, pound closer ■to English sterling is one that must come into greater prominence as the process of recovery continues, and; exchange may become a live issue later in the year. Authoritative opinion^ is that a drastic alteration, is not likely until world prices of wheat, butter, and other. primary products have been stabilised on a paj'able basis. The Lyons Government has always held that exchange must not be'a political question, and-has, asa matiter of political policy, taken steps to give-. the Commonwealth Bank Board complete control of exchange movements'. The bank 'would, of course, ascertain the views of the Government before any important change was made. It is certain that strenuous efforts would be made by country interests to prevent, any change,' because the .'pegging of the Australian pound at 25 per cent, below the English pound is working most advantageously to the exporters of primary products. On- the other hand, the influence of British exporters to Australia will be exerted towards bringing the Australian pound closer to sterling. . ' Under a plan of co-operation with the Commonwealth -Bank the credits held by Australian banks in London are "pooled;" .This earmarks, as a first obligation, £2,500,000 a month for Australian Governmental purposes in London:' Receipts from exports normally accumulate in London during the export season which, for 1933-34, is now Hearing a close. Usually from May until ,at least August, the trading pendulum swings over to imports, which exceed exports substantially. It is the duty of the banks to retain adequate funds in. London to meet the recurrence of demand on export bills, when it becomes pressing. Australian funds in London fluctuate, therefore. On April- 10, 1933, the aggregate was shown at £19,010,000, and a week later it had been increased to £21,769,000. On November 13 last tho funds were down to £20,000,000, but by the close of the year had grown to £23,000,000, indicating that the export season had returned and was commencing to overtake the import trade. The latest return shows that reserves have crown to £24,763,000. : Latest figures of Comrnoinvealth external trade—covering the seven months to January 31 last —reveal a surplus of exports representing £28,449,000 sterling. The greater part of that surplus would find its way' to the banks in London, and. would be "pooled" in accordance with- the arrangements made by the Commonwealth Bank.