2008
Press Release
20 March 2008
Currency Turmoil Presents Major Exposure for Exporters
Commenting on the recent exchange movements John Whelan, CEO of the Irish Exporters Association (IEA), Ireland’s main export organisation, said;
“The deepening credit crises in the US is putting over 15 Billion of our exports at risk. At today’s euro exchange rate to the Dollar, exporters have had to deal with an 8% fall in the value of their exports since the start of January 08.”
“The reality is exporters large and small can handle a short term swing in currency – however, we have had a 2 year continuous slide in the value of the Dollar, with a 20% fall in the period since January 07 alone.”
He went on to say:
“The current Euro/Dollar exchange rates do not reflect realistic valuations of either the US or the eurozone economies and makes real export valuations impossible. Major intervention by both the European central bank as well as the US Fed is now essential to restore stability to the international trade.”
“The Irish Government cannot afford to sit on the side line on this issue. Irish exporters are the more exposed than our European neighbours and positive action must be impressed on the ECB to reduce the over-valued Euro in the interests of stabilising the international trading system.”
The IEA also pointed to the rapid fall in the value of Sterling against the Euro, in recent months, with a 7% devaluation since the start of Jan 08. There is a real concern amongst the large number of small exporters, whose main source of income is the UK market, as Sterling is now falling in tandem with the dollar, both being locked together in the spiralling credit fallout. The UK accounts for 18% of total Irish exports, and last year this totalled to 16.4 Billion euro. A continued fall in the value of Sterling against the euro would have a severe impact on the indigenous exporters in Ireland, who are under cost pressures from continued high inflation, and record fuel price levels. These smaller exports do not have the resources to handle a continued over-valued euro and are much more likely to have to exit the export markets than the larger multinational corporations.
In conclusion John Whelan stated,
“The Euro is over-valued at current levels and if our wide range of small exporters are to survive the current exchange rate and fuel price turmoil, Government action is urgently needed, both in terms of reducing inflation at home, as well as ensuring lower interest rates from the ECB.”’
END
Ulster Bank (our partners on the Asia Trade Forum) have recently issued a concise commentary relating to trade & investment exposure arising from recent currency moves. See also the impact on investment return. See report here.
For further information, please contact:
John F. Whelan, Chief Executive, Irish Exporters Association
Mobile: 087 927 1243
Email: jfwhelan@irishexporters.ie
About the Irish Exporters Association (IEA)
The IEA represents the needs of export industry ensuring that the necessary conditions are created and the necessary support is provided to assist companies to maximise their export sales. The IEA draws its membership from every exporting sector, ensuring that the interests of all industries are represented and promoted at the highest level.
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