HC Deb 13 June 1939 vol 348 cc1106-7
56. Mr. Bellenger

asked the Chancellor of the Exchequer what is the reason for the serious fall in the exchange value of the Chinese dollar; and why the Stabilisation Fund has ceased to operate?

Sir J. Simon

I would refer the hon. Member to the statement issued in Hong Kong on 8th June, a copy of which I am causing to be circulated in the Official Report.

Mr. Bellenger

Was not the purpose of the Chinese Currency Stabilisation Fund, which was set up by legislation recently passed by this House, to keep the Chinese dollar on a stable basis; and, as the Chinese dollar has depreciated considerably since then, will the right hon. Gentleman say whether the fund has ceased to serve a useful purpose?

Sir J. Simon

I do not think it has ceased to serve a useful purpose. If the hon. Member will look at the statement which I am circulating, he will see the statement that was made.

Mr. Bellenger

Why has the fund ceased to operate? As British funds are involved, will the right hon. Gentleman give an answer to the question which I have put on the Paper, as to why the fund has ceased to operate?

Sir J. Simon

The hon. Member will, I am sure, appreciate that there could hardly be a better source of information on that point than the statement issued from Hong Kong, and it is to that statement that I am asking him to give his attention.

Following is the statement::

As is generally known, during the past Weeks there has been no pressure on the China Stabilisation Fund, and confidence in the national currency remains unshaken. The Control, however, temporarily withdrew its support; on Wednesday in order to allow the exchange value of the dollar to be adjusted to a better economic level, and thereby bring the balance of trade into equilibrium. As will be remembered, a similar step was taken during Jane, 1938,: and when the level of 8d. was found it was successfully maintained for 12 months.

It is confidently believed that the new level has now been found, and can be strongly held. Many goods previously imported are how being made at home. The favourable harvest foreshadowed by all reports will also contribute towards reduced imports. Arrangements have been completed so that Government requirements of foreign exchange for munitions and other supplies have been taken care of, and will not come on to the exchange market.

Finally, as the Stabilisation Fund has been strengthened and further efforts to broaden the basis of. this fund have been successful, the ability of the authorities to maintain the exchange will not be questioned. It is further emphasised that in spite of the present adjustment in the exchange level the national currency will continue to retain the confidence of. the people because, its free convertibility is at all times assured.

Forward to