The trade performance of a small open economy such as Ireland will always be conditional on the ebb and flow of global markets, including fluctuations in exchange rates. It is a matter at firm level for companies to negotiate the purchasing of inputs, including imported inputs, and then to set prices for sale to other firms or consumers.
The present exchange rate volatility highlights the importance of focusing on a wide spectrum of competitiveness policies, in particular policies to enhance competition and productivity. A competitive, sustainable, cost base can help to create a virtuous circle between inflation, wage expectations and productivity. These broad based competitiveness policies negate the need for short term measures and support Irish firms to compete in markets.