FOREIGN IMPORTS

Hokitika Guardian, 1 October 1931, Page 7

FOREIGN IMPORTS

CHECK OF ADVERSE EXCHANGE, INCREASED PRICES. EFFECT ON DOMINION. The dislocation of the foreign exchange markets caused by the suspension of the gold standard in Britain will undoubtedly affect the import trade of the Dominion with foreign countries. At present the position is obscure to all merchants j but the adverse foreign exchanges are increasing the landed cost of goods from foreign countries. An example of this is a shipment of Californian onions which was landed at Auckland from the Sonoma on Friday. The documents relating to this shipment arrived on Thursday, and as a result of the adverse rate of conversion of dollars the price of the onions will be increased to the consumer by a little more 1/0 a bag. Many merchants expect that similai increases will subsequently have to he carried by all goods from foreign countries, hut owing to the uncertainty oi the position at the moment shippers have withdrawn practically all current quotations pending a clearer outlook. One firm of London exporters which deals extensively in Spanish, Italian, and French lines, such as nuts, almonds, beans, and similar requirements ■which are becoming more prominent with the approach of the summer and Christmas season, advised its Auckland agents on. Thursday that all lines affected by foreign exchange were advancing in price. Similar advic s were received from other quarters, and until something further eventuates merchants are merely marking time, so far as overseas buying is concerned. American Exchanges Nominal. The banks, at present,-are not prepared to sell dollar drafts or telegraph transfers on America owing to the instability of the exchange rates.

Bills drawn on Now Zealand importers are being converted on the basis oi four dollars to the £, subject to the reservation that adjustments will be made when the rates can lie definitely fixed. The effect of this rate is that goods which cost £1 in America with the exchange at par (4.866 dollars to the £), now cost approximately £l/ 4/6. In computing American exchange, the general practice is to convert dollars into pounds at the rate current between London and New York, and calculate on the latter amount at current exchange rates. Owing to the present instability ot tlio exchanges, the effect upon the conditions of the Dominion's trade with such countries as Canada and the United States is Uncertain. The pound sterling will apparently remain lor some tilne at a substantial discount in terms of the American dollar, so that the cost of imports from the United States will be greater—assuming the maintenance of the present excuange relation between New Zealand currency and sterling. On the other hand, there will b| 3 au exchange premium on whatever exports can be made to tiie United States.

The present nominal quotations indicate similar effects, to a smaller extent. upon trade with Canada. Tim Canadian dollar is at a premium in terms of sterling, but a smaller premium than the American dollar, tile difference roughly corresponding with the extent oi the discount at which it is quoted in New York, On thebe facts, it is more advantageous to import from Canada than irom the United States and to export to the Uuited States —other things being equal. The position will however, not be defined until it is known whether the Canadian authorities propose to restore the currency to parity with the American dollar or have the means to do so. By shipments of gold exceeding £7,500,000 in December and January, the Canadian dollar was raised to par on February 1 but later fell again to a discount, and in spite of further gold shipments to New York has remained below gold point for some time. As New York is financially predominantly important to Canada, official policy will presumably aim at' maintaining the quotation in New York, and consequently the premium over sterling. A New York cable message, dated Saturday, stated that sterling exchange cables closed that day at 3.81 dollars to the £. The Canadian dollar dosed at 91.25 cents. A London message oi Saturday gave the rate on Montreal at 4.20 dollars to the £.