PM Transcripts

Transcripts from the Prime Ministers of Australia

Transcript 2506

STATEMENT BY THE PRIME MINISTER, MR WILLIAM MCMAHON, ON THE AUSTRALIAN DOLLAR

Photo of McMahon, William

McMahon, William

Period of Service: 10/03/1971 to 05/12/1972

More information about McMahon, William on The National Archive website.

Release Date: 20/12/1971

Release Type: Media Release

Transcript ID: 2506

FOR PRESS: PM 103/ 1971
STATEMENT BY THE PRIME MINISTER
MR.-WILLIAM McMAHON
ON THE AUSTRALIAN DOLLAR
The Government has decided to establish the market
rate-for the Australian dollar on the U. S. dollar at an
appreciation of 6.32% on the Previous parity relationship. This
means an overall depreciation in relation to the parities of our
trading partners as a whole of approximately 1.75%.
On this basis, the Government has decided that the
Reserve Bank will fix market limits for buying and selling centering
on a mid point of U. S. $ 1.1910 equals $ 1 Australian.
The Government has also decided that, in future,
exchange rates for the Australian dollar will be fixed on the
Uni ' ted States dollar rather than on sterling as has previously
been~ the Practice. on this basis the daily quotations for the
Australian dollar will maintain a fixed relationship with the
U. S.,-dollar. Turning to the other aspect, i. e. the gold parity, and
havihg in mind the margin of 2h% about parity recently approved
by ti-i International Monetary Fund, the Government's decision is
consistent with the maintenance of AustrAlia's gold parity in the
Fund. Australia's gold parity shows an appreciation of 8.57% on the
previous'parity relationship with the U. S. dollar. The gold parity
of a country's currency is, of course, a matter for its own
determination. Nevertheless, as a member of the international
Monetary Fund Australia, like other members, also has an obligation
under the Articles of Agreement of the Fund to obtain the Fund's
concurrence to any change we might wish to make in the parity of the
Australian dollar. Having regard to the Present strength of our
balance of payments, there would not have been any possibility of
demonstrating to the Fund that we are suffering from a fundamental
disequilibrium, the condition that must be satisfied to gain the
Fund' s concurrence. At the same time, however, the Government has noted that
the strength of the balance of payments over the past eighteen mor-. hs
has been the result, in no small measure, of an extraordinarily high
rate of capital inflow. The Government has already indicated its
concern as to some aspects of this matter by its public indication
that it has the whole subject under urgent examination. .9e./ 2

We shall. in fact be pressing ahead with that examination and I can
say now that we will not hesitate to take what action we consider
to be necessary. The changes in international exchange rates will
adversely affect some of the rural industries in which producers
re. already experiencing difficult times. The Government is
therefore.. prepared to. examine and consider the position of those
rural. industries which are-seriously affected.
CANBERRA, 22 December, 1971.

Transcript 2506