EXCHANGE RATES

Hokitika Guardian, 4 March 1931, Page 3

EXCHANGE RATES

NEW ZEALAND USED AS MEDIUM. AUSTRALIA TO LONDON. DUNEDIN, March 2. With the present high exchange rales against Australia, common iai men in the Commonwealth are exploring ways of getting money to London throiign the medium of Now Zeeland. A typical case is as follows: A Sydney business man wishes to send £IOO to London, and wants to save the exchange 'premium of 30 per cent. Accordingly, lie ships goods on consignment to New Zealand. Assuming that the goods are sold in the Dominion for .-£220, he has the sum f,\ £2OO transferred to London by cable, the exchange on. London tawing the balance of £2O. With £2OO in London, lie pays his debt of £IOO and sellsthe other £IOO to someone or some firm wanting money in London for £l3O.

As a result of this transaction, lie saves 20 per cent., on exchange and makes 20 per cent, profit on the sale of the extra £IOO transferred to London. He can thus afford to face a loss on the sale of the goods. It. is stated that a certain amount of business of this character is at present taking place, and if it becomes general it will react unfavourably on New Zealand manufacturers and on Hie financial position of the Dominion.”