The Guardian And Evening Star, with which is incorporated the West Coast Times MONDAY, FEBRUARY 20, 1933. CONTROLLING EXCHANGE.

Hokitika Guardian, 20 February 1933, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times MONDAY, FEBRUARY 20, 1933. CONTROLLING EXCHANGE.

Tim late increase in the exchange was a disturbing shock particularly to the commercial community. Prior to January'2o last, there was a feeling that the exchange rate had been stabilised, but a set cf circumstances 1 had arisen which caused the Government to change its former policy on the matter. Now that the agitation to the increase has subsided, there are those engaged in monetary I.run l ,’■actions who wish to see the future safeguarded regarding any sudden fluctuations in respect to the exchange rate. It is understandable that when the late increase was brought about so unexpectedly, that importing interests found their business dislocated seriously. Exporting interests ai*> in a more favourable way, but it is held by those directing fiuuucdal interests that there is now an air of serious concern brought about by their insecurity as to future movements of the exchange rate. It is this aspect which is being taken up by the Chambers of Commerce 1 who desire to se<> some future control established for the general protection of oversea business. It is pointed out that the importer can be seriously affected by the added cost hie, must add to his goods, and the fact that the dearer article will be less in demand. In the same way buyers cf exported goods fear that if they pay prices. based on present exchange rates they may fail to realise sufficient fo cover those .prices when their goods are finally marketed. Forward buying is likely to be reduced because of. the aspect just mentioned. There aspects relating to business, are believed to be a matter of con--1 corn, and will be reflected in the publie and local body administration. To control the . exchange,' it is suggested (1) that no change will be made in the rate during a definite period; (2) that when made, th© change will he in such a manner as to minimise business dislocation; and (3) that any surplus accruing overseas to he regarded ns an equalisation fund, and used to support the plan, These proposals are commendable as minimising the general effect, but circumstances alter oases, and no change can be made without pinching somewhere, More security m regard to 'stabilisation would help forward exchange dealings, and that would be helpful to the farmer whose produce makes up the bulk of the exportable commodities. New Zealand has been contemplating 4,central banking authority, and probably when established the control' of exchange would fall to that organisation. It is plain that any action which can remove the fear of further of exchange will be helpful to trade and business. Financial stability requires to he restored to remove all fear of sudden dislocations, and that degree of security the Government is at the moment bent on establishing. No doubt a return, to normal conditions will be welcomed all round, hut until that is possible, bv reviving trade and industry, the exchange rate now that it has been disturbed, will he liable to fluctuations and artificial means to arrest supply and demand will be difficult to establish securely.