The financial markets have taken the row over the European Central Bank presidency in their stride, reacting calmly to the weekend spat and the official confirmation of the rate at which currencies will enter the monetary union.
Analysts said last night that the rates came as no surprise and the row over Mr Wim Duisenberg as first president of the future European central bank - while fiercer than had been expected - had been well-flagged.
Despite widespread political criticism of the compromise deal on the bank leader, analysts say that the main questions it raises for markets relate to longer-term issues, such as how the new central bank will perform. And most remain confident that it will remain broadly free of political influence in its daily operations.
The main speculation yesterday surrounded an early increase in German interest rates, which supported the deutschmark and unsettled continental EU Government bond markets, where long-term interest rates rose slightly. The pound fell slightly against the deutschmark, finishing at 2.514 down from 2.5182.
The pound also fell slightly against sterling, finishing at 84.40p, compared to its previous close of 84.97p, but the major flow of funds to sterling which some had predicted would happen as a vote against the EMU project by investors failed to materialise.
Bank of Ireland chief economist Mr Jim Power said last night that "following the weekend shenanigans" he expected that the Bundesbank would now move to hike German interest rates to ensure that the currency remains strong against sterling and the dollar, in the run up to EMU. This would have no immediate implication for Irish rates, although it would mean they will have slightly less to fall later this year.
Mr John Beggs, chief economist with AIB Capital Markets, also said it was unlikely that Irish interest rates would be cut in the short term. He said yesterday had been a very up and down day. Meanwhile, the Dublin equity market was also quiet yesterday. Only a handful of stocks changed hands. Although it was a bank holiday in Ireland, the other major European stock exchanges were open and recorded strong gains, mainly on the back of Wall Street's continuing strength.
