I propose to take Questions Nos. 18 and 31 together.
The Irish pound broke parity with sterling yesterday morning following the appointment, by the Bank of England, of an administrator to Baring's Bank. Until last Friday it was trading at around 99.7p sterling. The present weakness of sterling has to be seen against a background of tensions in the foreign exchange markets, the domestic political situation in the UK and the immediate aftermath of the problem in Baring's. It remains to be seen whether the current sterling weakness will be anything other than temporary: the Deputy will be aware that sterling recovered somewhat overnight and that the Irish pound opened this morning at about 99.93p sterling. At lunchtime it was about 99.8p.
The Irish pound has been appreciating gradually against sterling. In the circumstances of a small and gradual appreciation of the Irish pound against sterling which is underpinned by the strong performance of the Irish economy, I have no proposals to provide special financial assistance to Irish exporters. Regarding relative competitiveness I have no doubt that the Deputy is aware that bank interest rates in Ireland are significantly below those in the UK and that this is of considerable benefit to Irish firms competing with UK based firms.
As I indicated to the Deputy in response to a previous Question on 25 January last, the objective of exchange rate policy continues to be the maintenance of price stability, that is, low inflation. As the Government's programme, A Government of Renewal, points out, a stable currency is essential to the maintenance of low inflation and competitiveness. By helping to keep inflation and interest rates low, this policy is very beneficial to Irish firms, especially those competing in export markets. My recent budget supports this policy and contains measures such as reductions in PRSI, income tax and corporation tax which are of direct assistance to firms seeking to maintain and improve competitiveness in export markets so as to maximise sustainable employment.
As regards sterling and the Deutsche Mark, the position remains that while exchange rate policy does not target a specific rate against a particular currency or group of currencies, our aim is that the Irish pound should trade against the Deutsche Mark and the Dutch Guilder at least as well as the rest of the former ERM narrow-band currencies.