Talk of revalued pound a spur to buyers

THE pound has risen sharply amid market speculation that the Government could move to revalue the pound in the run up to entry to monetary union. There is some speculation that the Irish authorities could move to revalue the pound's central rate upwards in the ERM, hut sources last night said there was no question of an early move, and insisted that the issue of entry rates has still to be addressed by EU finance ministers.

Late yesterday a London news agency reported speculation that the EU monetary committee of finance officials and central bankers had discussed the issue of a revaluation of the pound. However there were no other similar reports. But the reports were enough to lead to some late demand which pushed the pound to DM2.58 in late trading, more than 1.6 pfennigs above the previous evening.

The news led to a brief flurry of demand for the currency. But by end of trading buying levelled off.

With an election campaign underway, there is no question of an early move to revalue the pound's ERM rate. But some analysts believe that in the months ahead this would be the best way for the Government to stem speculation on the pound in the run up to monetary union. Most of the other currencies are trading near their central ERM rate and many market commentators believe that these rates will be used to set the entry levels for the single currency.

The Minister for Finance, Mr Quinn, has insisted repeatedly that no decision has been made on entry levels to the single currency. But he hinted that he believed an appropriate level would be somewhere between its current trading rate and the DM2.41 central rate.