David Andrews
Question:58 Mr. Andrews asked the Minister for Finance if his Department has costed the effects of the recent currency fluctuations on Irish exporters generally; and if he will make a statement on the matter. [14102/95]
Written Answers. - Currency Fluctuations.
David Andrews
Question:70 Mr. Andrews asked the Minister for Finance the effects, if any, on Irish exports arising from the value of the Irish pound against sterling over the past six months. [16869/95]
I propose to take Questions Nos. 58 and 70 together. I have not costed the effect of recent currency fluctuations for Irish exporters generally or over the past six months, because I do not consider that such an exercise would produce satisfactory results. This is for several reasons. To begin with, the impact of currency changes depends very much on the structure of individual firms. For example, if a firm is exporting to both the UK and Germany, it is faced with an Irish pound which has increased in value against sterling since last year, but which has during the same period fallen against the Deutsche Mark. The impact on individual firms will also be influenced by whether their raw materials are sourced in Ireland or elsewhere and their borrowings are denominated in Irish pounds or foreign currency. In addition, any consideration of the impact of currency movements would also have to take account of other factors which affect and are affected by such movements, for example, interest rates and inflation rates. In the case of interest rates, the level of indebtedness of the individual firm is again a key consideration. Furthermore, the impact of currency movements can be reduced or offset by financial techniques such as hedging as well as by cost reductions implemented by the companies involved. In these circumstances, I think the Deputy will accept that the costing exercise he suggests would require very substantial work, but could not produce meaningful results.
As regards the effect on Irish exports of the value of the Irish pound against sterling over the past six months, I take it that the Deputy is primarily concerned with exports to the UK. The latest published CSO trade statistics are for June 1995. They show total Irish exports continuing to perform well. Exports to the UK rose by 11.5 per cent in value in 1994. In the first six months of 1995 they rose by 15.3 per cent compared to the same period in the previous year. As in 1994, this growth was concentrated in leading, high technology, sectors. More detailed quarterly trade statistics on the commodity breakdown of trade with the UK have been published only for the first three months of the year. They show that the value of exports from the predominantly indigenous non-leading sector industries grew by 3.5 per cent in the first quarter of this year compared with the same period last year. This rate of growth is somewhat above the equivalent figure for 1994 as a whole.