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Tuesday, 7 December 1976

Mr LYNCH -That is a fairly typical question from the honourable gentleman. I think it does not bode well for the honourable gentleman to be expressing criticism of the Governor of the Reserve Bank in this House. As for the honourable gentleman's assertion that the 17te per cent devaluation was too much- I think this is the nub of the question which is before the House- I say to him that he completely misconceives the position. The Government changed the rate to meet a substantial situation that had emerged. The matter is in the past, but the facts are clearly a matter of public record and I do not need to repeat them here. We also changed the system so that we could adapt flexibly to future needs instead of having new pressures on the exchange rate building up again. I hope from what has been said both by the Governor and by myself that that is clear.

The group of officials which as I mentioned to the House a few moments ago was appointed to watch the exchange rate position concluded that the turnabout in the situation has been such that within a period of 10 days there should be an initial adjustment of the exchange rate in terms of the new flexible system. That change has been in the direction of an appreciation. To make a change was something we expected and something for which we provided in the initial arrangements. That the situation has so improved that the first change is a small appreciation is I think a development which ought to be welcomed on both sides of the House. The decision announced today is a reflection of the original decision. For the honourable gentleman to ask me to speculate on future movements is as irresponsible as the general context in which the question was framed.

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