Euro behind fall in export value

Irish exporters are losing €40 million in earnings every week as a result of the euro's strength against the dollar and sterling, the Irish Exporters' Association (IEA) has claimed.

IEA chief executive, Mr John Whelan, said the currency movements of the past year had caused "major difficulties" for exporters,attributing the bulk of his members' problems to the euro's 8 per cent rise against sterling. If this continues, it could add up to a €1.9 million decline in the profits of the export sector this year, according to IEA estimates.

About one quarter of Irish exports are sold into the UK.

Mr Whelan believes the euro's rise of more than 20 per cent against the dollar could be "most damaging" in the long run however, warning that it may cause many US multinationals to consider the "continuity" of their Irish operations.

"Irish exporters are facing the most challenging market conditions in over a decade," Mr Whelan said, highlighting domestic wage demands and price growth as factors further damaging exporters' competitiveness.

The euro failed to build on gains made after President Bush's hawkish State of the Union address yesterday, as many traders chose to step back from the market in advance of last night's Federal Reserve statement on interest rates.

The dollar also received some support from comments made by European Central Bank council member Mr Ernst Welteke, who said the rapid pace of the euro's rise against the dollar could become a problem for the euro-zone economy if it continues.

"People didn't have the enthusiasm to push it through $1.09," said Mr Rob Hayward, foreign exchange analyst with ABN Amro in London. Mr Hayward believes that profit taking could pull the euro back over coming days, but still sees potential for it to reach $1.10 in the near term. The euro was trading at $1.082 in New York last night. (Additional reporting, Reuters)