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NEW ZEALAND-STERLING EXCHANGE. https://www3.stats.govt.nz/New_Zealand_Official_Yearbooks/1935/NZOYB_1935.html#idsect1_1_184641 Although the movement of gold, whether internally or externally, was unrestricted in years prior to the War, certain of the conditions usually considered essential in the full operation of the gold standard were never effective in New Zealand. More correctly, New Zealand was. and still is, upon a sterling-exchange standard. The explanation is that the New Zealand banking system is not self-contained, in that the banks normally hold a large amount of funds in London. In fact, these London balances are the real regulative factor and the key to the whole banking system. This system has evolved out of economic conditions, and. in general, has functioned smoothly without effective legislative regulation.
War conditions caused the abandonment of the gold standard by Great Britain. A return was made in May, 1925, but from September, 1931, Britain has again departed from a gold basis. While New Zealand currency was at parity with sterling, except for minor fluctuations above or below parity, no necessity existed for distinction between sterling and New Zealand currency. The latter is entitled to be considered as one of the sterling currencies; but, adopting the convenience of a growing usage, sterling is used herein to refer solely to the currency of Great Britain.
The relationship of New Zealand currency to sterling assumed added significance since December, 1929. Prior to that date the Dominion currency was at parity with British currency, but then commenced to depreciate gradually, reaching, in January of 1931, a level of approximately £110 New Zealand = £1 in London for telegraph transfers. At that level it remained fairly stationary until January, 1933, when as a result of Government intervention (referred to below) it was abruptly depreciated to a further degree.
The unusual significance of the currency level in the case of New Zealand depends chiefly upon its position in regard to overseas trade and to overseas borrowings. The course of development of the Dominion has not reached a stage where the country is self-contained to an average degree and the external trade per caput is greater than that of almost all, if not all, other countries. Most of this external trade is with the United Kingdom, while the function of London as an international clearing-house is ako of importance in this connection. New Zealand's borrowings overseas, chiefly from the London financial market, have also been upon a high scale, requiring, as noted elsewhere {vide State and also Local Authority Indebtedness), heavy annual payments in London.
The following table gives, in order to complement and interpret other data in this volume, quotations representing the. amount of New Zealand currency required to purchase £100 London. The period covered is from January, 1929, to the commencement of Reserve Bank operations (1st August, 1934). Figures are quoted for telegraph transfer (cable) and sixty-day rates New Zealand on London as sufficiently indicative of the position. The majority of quotations are from The Statist (London), supplemented in a few instances from other sources.
Operative from Buying (£100 London). Selling (£100 London). Cable. Sixty Days. Cable. Sixty Days. 1929— 1st January* .. 98⅜ 100¾ 99½. 29th July .. 98⅝ 101 99¾ 4th September .. 98⅞ 101¼ 100 30th September .. 98⅞ 101½ 100¼ 4th December .. 99 l0l¾ 100½ 21st December .. 99¼ 102⅛ 100¾ 1930— 31st January .. 99⅝ 102⅝ 101¼. 18th February .. 100⅛ 103⅝ 101¾ 19th March .. l00⅝ 103⅝ 102¼ 3rd April .. 102½ 105 103⅝ 1931— 14th January .. 105 107½ 106⅛ 29th January .. 107½ 110 108⅝ 4th June .. 107¾ 110 109 12th October .. 107½ 110 109 1932— — March .. 107¾ 110 109 3rd May .. 107⅞ 110 109⅛. 1933— 20th January to 31st July, 1934 124½ 123½ 125 124⅝ — Specialrequestaccount (talk) 22:57, 24 May 2024 (UTC) [reply]
