THE value of the euro needs to fall 14% against sterling for Irish food exports to regain competitiveness.
Kerry Group Chief Financial Officer Brian Mehigan recently said the food industry needs the euro to settle at under 80p.
The exchange rate was at about 87p for much of February, and Mr Mehigan said, "It is fair to say that maybe there is some optimism coming in with the weakness of the euro. I think 87p for sterling is better than 94p, but it still needs to get down below 80p to be competitive," said Mr Mehigan.
The exchange rate had fallen from a peak of 94p last October. However, sterling weakened again last week, returning the exchange rage to 91p, and the difficulties of the past two years for Irish exporters due to weaker sterling are unlikely to recede in the short-term.
Sterling has been sliding for weeks and is the weakest of the main currencies this year, coming under fierce assault on money markets last week, even against the euro.
Speculators are betting against Britain’s fragile economy, and the £23.3 billion bid by British insurer Prudential for AIG’s Asian insurance operations. But it is the prospect of Britain’s second hung parliament since the second world war, in the upcoming general election, that poses the main threat to the currency.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Thursday, March 11, 2010
