Dan Boyle (Cork South Central, Green Party)
Link to this: Individually | In context

Question 89: To ask the Minister for Finance the threats the weakening in value of the US dollar poses to the economy here; the measures he intends to put in place to counteract these threats; and if he will make a statement on the matter. [29975/04]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Any sharp appreciation of the euro vis-À-vis the dollar is always a challenge to the economy. This arises because a strong euro reduces the competitiveness of the exporting sector. Indeed, Ireland is more affected than most within the euro area, given our deeper trade exposure to the US than many of our European partners. In this regard, it is important that businesses take necessary measures to cope with currency fluctuations, such as hedging against these risks as well as enhancing their flexibility to cope with currency movements.

The experience of sharp currency fluctuations in the past also highlights the importance of regaining cost competitiveness. Keeping pay increases in line with the terms of the current national wage agreement, Sustaining Progress, is important in this regard.

I also note that a depreciation of the dollar has some potentially positive benefits, most notably the fact that oil prices are denominated in dollars, and so the euro price per barrel of oil will be lower.