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Falling Euro Set to Boost Exports and Growth – state Irish Exporters Association
The Irish Exporters Association (IEA) stated that the euro’s sharp slide should provide a welcome boost to Irish exports and growth in the coming months. But stated that banks should facilitate exporting businesses who are trying to bolt in the current low euro exchange rate against Sterling and the US dollar, with extended loan facilities to cover forward hedging contracts.
The IEA advise that the Euro to Sterling exchange rate is now 7.6% below the monthly average across the whole of last year, which would give a boost of over one billion euros back to Irish goods exporters to the UK over the next 12 month period if bolted in .A similar gain would accrue to services exporters to the UK.
On the advantage of the weaker euro to the US Dollar, the IEA stated that the current rate is 7.9% below the monthly average across last year, and represents a €1.7 billion gain to Irish goods export companies.
John Whelan Chief Executive of the Irish Exporters Association (IEA), the export industry’s main business representation group stated;
‘’The recent sharp fall in the value of the euro against both Sterling and the US dollar , will give a strong boost to Irish export competitiveness , but exporters will be anxious to lock in the gain by forward hedging contracts with their banks to cover the next 6 to 12 months trading . This will inevitably put pressure on the normal exporters working capital, and hence we are calling on the banks to extend banking facilities to support exporters in their more extended currency hedging requirements.’’
The IEA Chief Executive went on to urge Minister Richard Bruton T.D. , to urgently release the Loan Guarantee Scheme to the nominated banks which will assist both the banks and exporters to maximize on the current favorable exchange rate , stating ;
‘’We have been promised this new Loan Guarantee Scheme for the past 18 months , and more than ever need it now . Exporters cannot understand the long delay in putting this agreed scheme into place.’’
The IEA warned that the weaker euro was not a get-out –of –jail –free –card, as due to our high imports from the UK, we will inevitably see a rise in the cost of imported goods. Mr. Whelan stated on this issue that it was essential that we maintain our cost competitiveness, particularly on the wages front, even if we were faced with rising inflation.
John Whelan, CEO of the Irish Exporters Association stated;
‘‘In this critical time for exporters, we need a pro-active stance by all the banks to reduce the cost and complexity of hedging facilities. Equally we need a more urgent response from Government in putting the Loan Guarantee Scheme into place.’’
John Whelan, Chief Executive, Irish Exporters Association
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