Buying exchange forward, to meet a known liability
on a known date, is not gambling: it is the reverse
of gambling. And the seller does not gamble
either: he always " covers", if the transaction is
with a Bank. It reduces itself to a question
of interest for a definite period.
2. I think there was, however, an element of
"gambling" here, if one likes to call it that.
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The essence of the thing was that the Govt: took
a view". it was not a case of Xanding arranging for
a definite liability, on a known date.
3. AS to the advisability of such action, I would
leave the local Govt: to decide what it is best to
do, in each individual case. Clearly, it must be
their decision. The alternative is to send money
exactly--within reasonable limits--when money is
required. That, to my mind, is unintelligent, and will
in the long run result in loss--avoidable loss.
They ought to be in a position,with the expert advice
available to them, to remit,broadl, speaking, at the
right times. Why fetter their discretion? They will
only be remitting funds which the, must remit, sooner
or later; and their only interest is to remit as
cheaply as possible.
4. ¡ I may say I acted on this principle when
making very large transfers between London and Athens,
with a violently fluctuating exchange. I took advice;
followed the situation in the light of the knowledge
available; and converted at the times that seemed to
me most suitable. The result was that I converted
us into drachmae at rates,year by year, considerably
better than the average. That is what Hong Kong wants
to do:--and it seems to me common-sense. )
The 17-7-33.
1/7/35
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