Dáil Éireann debate -
Wednesday, 5 Mar 1997

Vol. 475 No. 8

Written Answers. - Currency Fluctuations.

Dermot Ahern

Question:

30 Mr. D. Ahern asked the Minister for Tourism and Trade the steps, if any, he has taken to assist exporters under pressure due to the current currency fluctuations; if it is trade policy to align with sterling; and the trade implications this has in the post European Monetary Union scenario if Ireland joins and Britain does not. [5974/97]

Michael McDowell

Question:

56 Mr. M. McDowell asked the Minister for Tourism and Trade the steps, if any, he is taking to assist Irish exporters who were encouraged to diversify away from the United Kingdom market and who now face exchange rate difficulties in the run up to the introduction of the Euro currency; and if he will make a statement on the matter. [6022/97]

Minister for Tourism and Trade (Mr. E. Kenny)

I propose to answer Questions Nos. 30 and 56 together.

As a small open economy, we are vulnerable to the impact of fluctuations in exchange rates, hence this Government's commitment to Ireland becoming a founder member of European Monetary Union. The recently published ESRI report on the economic implictions for Ireland of European Monetary Union, which was commissioned by the Minister for Finance, concluded that European Monetary Union membership would be favourable for Ireland. The net benefit of lower interest rates, coupled with savings on currency costs, would more than offset any competitiveness losses. That conclusion applied whether or not Britain joined European Monetary Union.

Specifically to assist any exporters who may currently be experiencing difficulty due to the present strength of the Irish pound against certain EU currencies, ABT has recently established a special task force to work with such companies, and monitor developments in the French and German markets. ABT is advising exporters to emphasise non-price factors such as quality, design etc. and ensure proper treasury-exchange risk management. This task force will operate on a similar basis to the sterling task force which assisted companies in difficulty in the UK market for similar reasons last year. As Deputies may be aware, the Irish pound has depreciated significantly against sterling in recent months.

I should also mention that ABT is continuing of course to provide very substantial support to firms exporting to Europe as part of their ongoing programmes of activity, known as opportunity Europe, to increase Irish exports to that market; in the current year, this amounts to approximately £10 million.