Strong dollar could hit Irish exports, admits Cowen

The Minister for Finance, Mr Brian Cowen, has acknowledged that the sharp fall in the value of the US dollar against other currencies could affect the competitiveness of Irish exporters. He insisted, however, that the Irish economy was in a stronger position than that of most European countries to deal with exchange rate shocks.

"If you look at the Sustaining Progress agreement, the dollar was €1.03 when that was agreed by business with unions and the Government. Now it's €1.34.

"Obviously that affects the competitiveness of some Irish businesses with regard to their ability to sell into the markets. We'd love to see it back to where it was, ideally," he said.

Mr Cowen was speaking in Brussels after euro-zone finance ministers issued a joint statement that appeared to blame Washington for the dollar's slide and called for a US policy response.

"Recent sharp moves of exchange rates are unwelcome and not conducive to orderly adjustments of external imbalances. All major countries and economic areas must play their part more actively in reducing global imbalances by putting in place the appropriate economic policies," the statement said.

Mr Cowen said that, with the euro-zone economy growing at an annual rate of just 2 per cent, the ministers were concerned about all factors that could dampen growth.

"Thankfully, Ireland's growth is predicted to be something in the region of 5 per cent We're dealing with the situation from a position where growth is more than twice the European average, where unemployment is less than half the European average," he said.

The ministers discussed breaches of the Stability and Growth Pact, and the Economic and Monetary Affairs Commissioner, Mr Joaquin Almunia, announced that the Commission was preparing to drop disciplinary procedures against France - and possibly Germany. "I hope I can give the Germans good news. But we are still analysing the latest measures adopted by (its) parliament," he said.

The ministers criticised Greece for submitting false budget data over a number of years but said that European institutions, including the European Central Bank (ECB), had to improve their systems for evaluating data.

Italy is the latest country to come under suspicion over its budget data, with the Commission expressing "concern" over the accuracy of information submitted by Rome about its deficit.