Vol. 425 No. 8
33 Mr. Cullen asked the Minister for Finance his views on whether the currency markets continue to place a very high emphasis on the interdependence between the Irish and British economies, notwithstanding our long membership of the ERM and the very considerable diversification of our international trade over the past two decades.
Our experience since last September indicates that the currency markets do place a high emphasis on the interdependence of the Irish and British economies. The UK proportion of our trade has declined significantly in recent years, while there has been a significant growth in our trade with other European markets. In addition, our performance in recent years on inflation and wage movements has been better than the UK's. Some appreciation of our currency vis-ávis sterling has therefore been justified, and the currency markets appear to be recognising this fact given the new levels of our sterling exchange rate.
The markets should continue to consider other factors, such as our ERM position, our commitment to European Monetary Union and the growing diversification of our foreign trade in looking at our sterling exchange rate. The value of our currency in the face of such a significant fall in the value of sterling should add to the growing belief that Irish exchange rate policy is becoming less affected by volatility in the UK currency.
