Response to letter writer

Hugh Webb (letter, November 27) is mistaken in his belief that New Zealand could have avoided a foreign-exchange crisis in 1984 by heeding defeated Prime Minister Muldoon’s call not to devalue.

The Treasury and the Reserve Bank had been urging a devaluation since 1982. Muldoon’s mismanagement continued to wreck the economy, and by 1984 devaluation was essential.

He triggered a currency crisis by announcing a snap election, because a devaluation was likely after the election, whichever party won. The day after the announcement, a heavy outflow of funds began, making the need for devaluation urgent.

When he lost the election, Muldoon was loath to give up power and became

John Conroy Brough, Otorohanga