Back to Last Year's Rate.

Fiji Exchange

THOSE acquainted with the facts were not surprised when, on April 7, it was announced that the rate of exchange on Fiji had been altered back to about what it was last year. £113/10/- Australian is now required to buy a credit of £100 in Fiji. The Fiji £ is now about 11 per cent, under sterling. The new rates are shown in detail on page 46.

As has been pointed out repeatedly in this journal, it seemed strange that Fiji, in its peculiar circumstances, should adhere to the Australian exchange rate of 25 per cent, under sterling.

Fiji, it may be remembered, originally backed its note issue with gold. When gold disappeared, the banks were permitted to purchase the Fiji notes from the Fiji Treasury with sterling drafts on London. For some reason, the British Colonial Office dis couraged this; and the Fiji Treasury was instructed to accept, instead of sterling, New Zealand bank notes New Zealand exchange being then at par with Fiji.

This worked well enough, and the Fiji Treasury found itself with a large sum of New Zealand currency. Then New Zealand suddenly moved its exchange from about 12½ per cent, under sterling to 25 per cent, under sterling, thus coming to par with Aus tralia. Fiji, of course, had to follow, or lose about 12½ per cent, on at least £100,000 of New Zealand currency which it held as backing to Fiji bank notes.

The new arrangement benefited Fiji primary producers, and penalised all users of imported goods (and Fiji manufactures nothing). This might have been well enough—the obvious benefits probably offsetting obvious disadvantages—only that, in the case of Fiji, the great bulk of the exports is represented by the sugar produced by the C.S.R. Co., Ltd. The net effect of the exchange position, therefore, was that the C.S.R. was receiving a very large part of the additional revenue

from the exchange premium, which was going to headquarters in Australia, as a matter of course, instead of being spread around in Fiji. But the addi tional cost of purchasing imported goods was still being paid by resi dents of Fiji.

We said, at the time, that the Fiji exchange rate would not last very long, and so it has proved.

We have not heard how the Fiji Government got over the difficulty with its N.Z. currency. It seems to have only two courses open—to charge the loss against current revenue, and for get the unfortunate affair; or else to keep hold of the sum in New Zea land currency, in the hope that N.Z. exchange will move a little nearer to par with sterling, sometime within this decade.

A meeting of the Suva Chamber of Commerce, on March 7, was unani mously against the 25 per cent, ex change, and in favour of a change.

The chief speakers were Mr. D. W.

Amos, Mr. T. Horne, and Sir Maynard Hedstrom (chairman).

The whole incident of the Fiji exchange is only another example of the uncertainty and confusion of inter national trading without a fixed standard of value —and is therefore only another example of the funda mental cause of the world’s present lamentable condition.