Exporters warn weaker euro will not boost business

AS the euro hit another new four-year low against the dollar before rallying somewhat, exporters warned the weaker currency would have little impact on sale of Irish goods and services into Britain, the key market for indigenous exporters.

Having recovered to $1.2450 against the dollar on Tuesday, the euro got sideswiped in overnight trading and fell to new lows of $1.2144.

Later in the day it bounced back in volatile trading fuelled by speculation that Switzerland’s central bank may intervene to support the Swiss franc.

In afternoon deals, the euro had recovered to $1.2365, having hit lows not seen since April 2006 – as the markets worried over European debt and after the German’s moved to ban speculative trading practices.

Germany banned naked short-selling in the shares of 10 financial institutions and eurozone government bonds, a move it hoped would put an end to severe fluctuations.

Some in the markets fear the Germans know something sinister is about to happen, such as a Greek default on their debt.

Another fear is that Germany is moving towards withdrawal from the euro because it can no longer afford the huge debt burden involved in funding the rest of its EU partners and that the €440 billion bailout package was the last straw.

Irish Exporters Association chief executive John Whelan said the weaker euro will have no material impact on indigenous exporters.

The majority rely on the British market for their sales overseas and the exchange level is still way out of line with where it was in the five years up to 2008. Across that period the euro traded at around Stg78p but is currently in the 87/88p ballpark.

“While that represents a 3.5% recovery above where we were in January it will have little or no impact on sales of Irish firms into their core export market,” said Mr Whelan.

The gap between the euro and sterling “is still a big concern for indigenous exporters”, he said.

He warned of other pressures coming down the line including the likely increase in VAT to 20%.