asked the Minister for Finance the amount by which the exchange rate for sterling has dropped since 1970 in relation to other European currencies.
Ceisteanna—Questions. Oral Answers. - Sterling Exchange Rate.
24.
The percentage depreciation of the exchange rate for the pound sterling between 1970 and mid-1974 against the main western European currencies was as follows:—
|
% |
|
|
Belgium/Luxembourg |
23.82 |
|
Denmark |
20.24 |
|
France |
12.79 |
|
Germany |
30.21 |
|
Netherlands |
26.43 |
|
Norway |
24.02 |
|
Sweden |
17.02 |
|
Switzerland |
30.75 |
|
Spain |
21.62 |
The pound sterling has depreciated by 3.93 per cent against the Italian lira.
A better picture of the real effects of exchange rate changes is given by the movement of the average trade-weighted or effective rate. The depreciation in the effective rate of sterling since 1970 is about 17 per cent. On the other hand, given the maintenance of the one-for-one relationship between the Irish pound and sterling and the pattern of our trade, the effective exchange rate of the Irish pound has declined by only 6 per cent over the same period.
In general, the effect of the depreciation is to increase the competitiveness of our goods in the countries concerned and this is being reflected in increased exports. Exports to the other EEC countries, excluding Britain, increased by 78 per cent in 1973. In the case of imports there may be opportunities of switching to cheaper sterling sources of supply. There may also be opportunities of switching to relatively cheaper domestic sources with benefit to Irish output and employment.
Pending the unlikely event of a European common currency, does the Minister still feel we should retain our absolute link with sterling?
The position is kept under constant review and, if it should ever occur that it would be to our advantage to change the relationship, we will not hesitate to make that change, but that is not likely for a long time to come.
In the light of the devaluation of the Irish £, could the Minister say whether, on balance, it has been advantageous or disadvantages to our economy?
I would say that, on balance, it is advantageous in the circumstances of the last few years but, as I pointed out, the effective depreciation of the Irish £ is only 6 per cent which is a great deal less than the depreciation of the £ sterling.
Could the advantage to our economy be increased considerably by the adoption of a green £?
The two are not related. The green £ is a bookkeeping exercise within the EEC. It has no bearing whatsoever on the value of our currency.
I think that is a somewhat doubtful statement.
Has it any bearing on the £ sterling?
It has no bearing on normal currency.