asked the Minister for Finance the beneficial effects accruing to the Exchequer as a consequence of the fall in value of the US dollar.
Written Answers. - US Dollar Value.
32.
A sustained fall in the value of the US dollar would have both short and long term effects. In the short term the principal beneficial effect is that each one percentage point fall in the value of the US dollar would reduce Exchequer interest payments by approximately £2 million in a full year and would reduce the Irish pound value of the foreign debt by about £23 million. Gains or losses on the Irish Pound value of the foreign debt are realised only when the debt is paid off. The impact on the cost of servicing debt of a change in the value of the dollar may be offset to a significant extent over a particular period by changes in other exchange rates and interest rates.
In the short term a fall in the dollar makes it more difficult to export to the US and could have an adverse impact on US tourism to Ireland. It also makes imports from the US more competitive here. The scale of the impact of such developments on Exchequer revenue is difficult to quantify but should be small. However, in the longer term a more balanced world economy should encourage the growth of world trade and be beneficial in terms of Exchequer revenue.