Euro decline spells ‘good news’ for Irish exporters

LEADING economists said yesterday the decline in the euro is good news for the Irish economy because it will give a huge impetus to Irish exports.

Euro decline spells ‘good news’ for Irish exporters

Ronnie O’Toole, chief economist, National Irish Bank, said yesterday the euro “is overvalued, and its ongoing decline is good news for Irish exporters who are much more dependent on selling into the US and the UK than the rest of Europe”.

In the current environment, where markets are nervous about the eurozone, the chances are the euro will fall back to $1.17 pretty quickly and it is possible that further losses could be made in the period ahead as Europe struggles to get its national finances in order.

“Ten years ago today the euro bought just $0.89cents and has been overvalued against sterling and the dollar for quite some time,” he said.

Bill Hubard, chief economist with MIG Bank SA in London, warned in the current environment the risk was that the euro could fall to parity in a very short time.

“The euro was way overvalued from the start,” he told Bloomberg television yesterday.

Having hit a four-year low of $1.2160 on Tuesday, the euro has made modest gains and was trading at around $1.22 yesterday afternoon.

Traders are expecting the currency to trade lower in the days ahead.

Moves by Germany to prevent speculation on key German stocks and debt instruments have not eased market fears as analysts warned political interference did not work.

In a speech yesterday German Chancellor Angela Merkel called for much stricter regulation of international markets, which she said must be the “benchmark” within Europe.

Hosting an international conference, she said all governments must act together in showing greater budgetary discipline.

She called for a coordinated approach to removing stimulus measures put in place to support economies.

In a strongly worded speech on Wednesday to try to persuade German MPs to back its contribution to the Greek bailout, Ms Merkel said Europe faced “the biggest test in decades”, with the euro “in danger”.

France’s economic minister said yesterday the euro was not at risk.

Christine Legarde told RTL Radio: “The euro is a solid and credible currency. I absolutely do not think that the euro is in danger.”

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