Ridiculous Currency Situation In

South Pacific

Tonga Holds Australian Parity :: Three Grades of £, With Fluctuating Franc and No Dollars

From Our Own Correspondent

Nukualofa. Nov. 17.

TONGA officially has decided against maintaining parity with NZ currency, which recently moved up 25 per cent, in value, to parity with sterling.

Our financiers should know best. Yet there are those who do not approve.

It is bad enough that we should now have to pay an extra five shillings for every £1 worth of NZ goods; but, whether affected or otherwise by this change,* a 25 per cent, mania is now “getting” our people badly, even down to local purveyors of vegetables, butter and firewood.

In consequence, Price Control here is now merely another farce.

Coin manipulators also are busy with their hoards of NZ coins, dislocating busi ness and copra buying.

Stocks are showing signs of sticking to the shelves of the stores, nowadays, and our big merchants are getting anxious.

The days of quick turnover are slowly passing away. The arrival of large ship ments by each boat is gradually glutting the market, at ever-increasing prices. So the wise trader is stepping warily, and do ing much calculating.

Editorial Note

Three Kind Si Of £

THE Tongan decision —to maintain parity with Australian currency, and not follow New Zealand to parity with Sterling—creates a very remarkable situa tion in the Central Pacific groups of Islands—namely, Fiji, Tonga, Samoa and Cook Islands. Samoa and Cook Islands went with NZ to Sterling, while Fiji de cided to stay where it was—namely, 12i per cent, under Sterling.

Now, within *the Central Pacific groups, we have: Samoa and Cooks Sterling Fiji 12i% Under Sterling Tonga 25% Under Sterling To the south of the CP groups, and in intimate trading contact with them, is New Zealand, on parity with Sterling. To the southwest, and also trading heavily, is Australia, 25 per cent, under Sterling.

To the northwest and to the east, but with little trade, are the French currencies in New Hebrides, New Caledonia and French Oceania, which are heavily dis counted, in comparison with Sterling. In the far northeast, we have the Dollar areas—but Dollars are almost unprocur able.

It creates a general exchange situa tion so confusing that it is likely to drive bank officials and Big Firm accountants into madness. It is also a ridiculous situation—it is astonishing that the Gov ernments of the United Kingdom, Aus tralia and New Zealand should have done nothing to reconcile these clashing currencies.

Actually, the Tongan Government took a wise decision. It would have spelled ruin for that little Kingdom, with its pre carious economic balance, if it had fol lowed NZ to Sterling parity, because only a small proportion of Tonga’s exports (bananas) goes to NZ, while most of Tonga’s imports have been coming from NZ. Tonga’s main export (copra) is bought by Britain, so Tonga already was getting whatever benefits were available

to her from Sterling. By following NZ, she might have got some benefit from in creased money for her bananas, but that gain would have been completely swamped by the much higher price she must pay NZ for goods imported from NZ. What she will do now, to maintain her economy, is to cease buying from NZ, and buy in stead from Australia (whose currency, 25 per cent, under Sterling, is on par with

her own) and from Fiji (123 per cent, under sterling). She may expect benefits from two sources—from higher prices for her bananas sold to NZ. and from an increased tourist traffic—for New Zea landers, finding their money now so much more valuable in countries which main tain the Australian exchange rate (25 per cent, under Sterling) will naturally want to visit places like Tonga and Norfolk Island.

But the whole currency situation in the British South Pacific Territories (Sterling in New Zealand, Samoa and Cooks; 12£ under in Fiji; and 25 under in Australia, Papua-New Guinea, Solomons, Norfolk and Tonga) is ridiculous ,and typical of the financial genius behind the Socialist Gov ernments of Britain, Australia and New Zealand.