NEW ZEALAND EXCLUDED FROM STERLING AGREEMENT WITH JAPAN

Grey River Argus, 2 June 1948, Page 4

NEW ZEALAND EXCLUDED FROM STERLING AGREEMENT WITH JAPAN

(N.Z.P. A.—Reuter) (Rec. 9.0) TOKIO, June 1. An agreement between the British Commonwealth and Japan, on an overall, currency arrangement was announced to-day by General MacArthur, under the agreement, both private and Government trade between Japan and the sterling area countries will be on a cash sterling basis. Japan, however, will continue to be regarded as a “hard currency area. Officials at General MacArthur s headquarters said that the new payment agreement was expected to facilitate and greatly expand trade between Japan and the sterling area countries. The sterling area representatives were less optimistic. Sterling acquired by scrap on behalf of Japan, in excess of the amounts which can reasonably be expected to be spent in the near future, will be convertible into dollars at regular semi-an-nual dates. It is thought that this convertibility clause of the agreement will seriously restrict sterling area purchases from Japan. The agreement will supercede the interim sterling agreement adopted in November, which applied only to private trade. The initial participants are the United Kingdom and the Colonies, excluding Hong Kong, New Zealand, Australia, Burma, Iceland, Iraq, Pakistan, South Africa, the Persian Gulf Shiekdomp. The agreement applies to all trade between Japan and the designated sterling area countries, except for transactions involving cotton textiles manufactured from raw cotton procured in the United States. These cotton textiles will continue to be made available for payment only in dollars, acceptable foreign exchange, or goods, or any combination of these, deemed advisable by General MacArthur’s headquarters. Informed British sources said the agreement could be regarded only as a first step towards increased trade between Japan and the sterling area, for it would make little difference to the actual volume, unless followed by a further agreement. The chief effect of the agreement, it was stated, would be to place Government trading on a proper cash basis.