Dáil Éireann - Volume 592 - 16 November, 2004

Written Answers. - Currency Fluctuations.

  97. Mr. R. Bruton asked the Minister for Enterprise, Trade and Employment the impact which the continued strength of the euro against the US dollar and the pound sterling has had on Irish exports; if he has adopted a strategy to assist the export sector as a result of this; and if he will make a statement on the matter. [28389/04]

  111. Mr. Boyle asked the Minister for Enterprise, Trade and Employment his plans to counteract difficulties that may arise for Irish businesses from the continuing rise of the euro against the US dollar. [28473/04]

  Mr. M. Ahern: I propose to take Questions Nos. 97 and 111 together.

The euro has appreciated by almost 4% against the pound sterling since August up to date this year. Over the longer term however, it has been relatively stable. The euro-sterling rate has averaged 0.68 so far this year, compared to an average of 0.69 for 2003 as a whole. The euro has also appreciated by almost 5.5% against the dollar since August and the euro-dollar exchange rate has averaged $1.23 this year compared with an average $1.13 for 2003 as a whole.

It is difficult to contemporaneously identify the impact of exchange rate movements on export trends as distinct from other factors that influence developments in export markets. Available statistics show that the total value of exports in the period January to August this year rose by 4% over the same period in 2003. Exports to the US in the January to September period fell marginally, by 1%, over the same period in 2003. Exports to the UK in the January to August period fell by 3%.

Total export volumes have risen by a slightly higher rate that export values — by 4.4% in June, the latest month for which figures are available. This indicates that the average price for exports has fallen. The strength of the euro is one factor in determining the overall competitiveness of Irish exports outside the eurozone. A strong euro [759] also helps to lower the cost of imports from outside the eurozone. Approximately two thirds of imports comprise inputs to Irish industry that are subsequently re-exported.

The Government assists Irish companies to cope with these competitiveness challenges. Enterprise Ireland provides a range of supports domestically and also through the services provided by its network of overseas offices. In particular, the Government has been encouraging and assisting Irish exporters to diversify exports towards the euro area, where the operation of the single currency has removed foreign exchange risks. In 2000, Enterprise Ireland launched EUR:OPP 2003, a strategy to increase sales in Europe and to provide clients with the skills and opportunities to win substantial business in the eurozone. Last year, client companies of Enterprise Ireland recorded exports to continental Europe valued at €2.8 billion, a growth rate of 4.7% over 2002.

Companies exporting into volatile and uncertain markets are also encouraged to adopt hedging strategies in anticipation of foreign exchange rate risks. Enterprise Ireland, in association with the Irish Exporters Association and National Irish Bank, organised a series of foreign exchange risk strategy workshops throughout the country. These were entitled Managing Your Foreign Exchange Risk — A Strategy for the Future. The workshops, which were held between June and October this year, were designed to inform exporters about foreign exchange rate risks and the strategies that they can adopt to manage and reduce them. A number of additional workshops were organised in response to excess demand from companies seeking advice and information on currency related issues.

While the Government is committed to doing all it can to ensure that the most competitive environment exists for exporters, exchange rate movements reflect international economic trends and are outside the control of individual Governments. Other eurozone countries have also been affected by the rise in the value of the euro. It is a matter of concern for all eurozone economies.

The Government and its agencies are keeping developments under review. All are listening to the views of exporters and will do what is possible to compensate for negative currency movements so that our competitiveness is not adversely affected pending improvement in the global situation.