Vol. 425 No. 8
46 Mr. Boylan asked the Minister for Finance if his attention has been drawn to the economic difficulties arising from the present currency turmoil; the action, if any, he will take to remedy the situation; and when he will take this action.
As the Deputy will appreciate, the economic effects of the currency crisis have been under continuing consideration during the last 5 months. Mindful of the difficulties which the crisis had presented, the Government had established the Market Development Fund to alleviate the problems faced by exporting industry and had finalised proposals to implement exchange risk guarantee schemes to provide low cost funding to businesses and reduce the upward pressure on mortgage rates.
The decision to seek a realignment of the Irish pound within the ERM was taken when it was apparent that it was not possible to achieve an acceptable level of interest rates in the face of the continued speculation against the currency and the potential harmful effects these rates could have on industry and employment. It was also taken because of the effect of the changes in the currencies on the competitiveness of our exports. The effect of the realignment to date has been to reduce the market rate of exchange for the Irish pound against our main trading partners and to ease significantly the pressures on wholesale interest rates. This should alleviate the pressures on business. Indeed, some exporting industries will have a new competitive advantage in some markets as a result of the devaluation.
