AS one market commentator put it: after Thursday it was Quinn 1, the Central Bank 00; by yesterday evening it was Quinn 1, the Central Bank 2.

Until yesterday morning, the Minister for Finance must have been happy with recent events on the currency markets. Farmers, exporters and the public finances were all to benefit from the fall in the value of the pound.

But then came the Central Bank's late strike. The Bank's hike in interest rates will affect an even larger section of the voters in the run up to an expected general election. However, it should not be forgotten that savers will benefit.

According to market speculation, the Bank rang the Minister in the morning informing him it was planning to move. It was persuaded to delay - but only until the credit numbers were released.

By 4.30 p.m. the deed had been done and the Central Bank had raised its official interest rates by half a percentage point. The market went into shock; very few analysts had believed it possible.

The repercussions are difficult to fathom but one likelihood is that the bond markets will follow the currency into freefall today.

Whether the interest rate rise will prove useful to the economy is a moot point. Most economists believe it will not.

Before the Bank's move, Mr Quinn must have believed he was on to a good thing. And the Taoiseach was also pleased, talking about taking back control of our own exchange rate. Not only had the currency market moved in the direction the Government wanted, but the fall of the pound was a likely vote winner among farmers and many exporters. There are also significant advantages for the public finances in a weaker pound.

The main reason for the fall in the pound's value is an increasing concern that the economy will suffer if we enter the new single currency at too high a rate. There is also a growing belief that all countries participating in the single currency will be locked into the system at their existing central rates. While this would not have proved to be a problem for most European currencies, the pound was out on a limb.

When Mr Quinn announced on Reuters TV two weeks ago that he would prefer to see the pound closer to its central rate, it is unclear whether he meant it to fall quite so far so quickly.

A more gradual fall and later in the summer would probably have been preferable. Nevertheless, it is now possible that there will be up to three green pound devaluations before a possible polling date on June 6th. The first could be triggered as soon as May 6th, although May 16th is far more likely.

This will put much of the money the farmers have lost through two revaluations of the green pound back in their pockets. The farmers' lobby groups have been most vociferous recently about the need for just such a fall. The Government may also have been looking at the implications of the pound's value on its own EU funding position. It has been at risk of losing significant sums of EU funding because of the strong exchange rate. Over £1 million of European Regional Development Fund money was at risk because of the strength of the currency, according to Mr Peter Faulkner or IREX, the exporters' group, and it is also possibly that up to £350 million of structural funds, money could have been lost.

Perhaps this went some way to explain the Taoiseach, Mr Bruton's enthusiasm for the drop on the radio on Wednesday. "The Irish economy makes its own decision now," he enthused. We have decoupled from Britain."

To what extent that is true is open to question.

Many commentators would say that it is London currency speculators who are actually determining our currency policy.

Meanwhile, the Central Bank was far less enamoured with the tumbling pound. Whatever the precise reason for the Bank's move, sources say individuals on Dame Street were enraged by the falling currency. They see themselves as the guardians of low inflation and the politicians were taking away the one area which they could still use to control the economy.

The only weapon felt was interest rates. The Bank had left rates very tight over the previous couple of weeks and, after the sell off, money market rates act moved above the Bank's short term facility (STF).

To start with, most people we sanguine and believed the Bank could not actually put up rates. After all it would only exacerbate their currency worries.

In addition, interest rates, like the currency, will have to fall in the run-up to the single currency. This means that the rise is unlikely to have much impact on any of the areas the Bank could be targeting.

It also sets us up for larger falls in rates as monetary union draws closer than would otherwise have been the case. This is the main reason why the hike will have little impact. Normally, interest rate increases fuel the demand for a currency and make it more lucrative to hold. However, with cuts virtually guaranteed, this will not happen.

It is also questionable whether the rises in retail interest rates will have the desired effect of choking off some demand on the housing market.

Most potential homebuyers are likely to conclude that rates will fall again next year and not hold off buying the house. On top of that, a growing percentage of homeowners are now on fixed rate mortgages.

Of course, the Central Bank had another reason to push up rates, with a very large increase in borrowing from banks and building societies in March shown in figures published yesterday. Private sector credit growth at 18.6 per cent is far higher than market expectations, even if exceptional items were responsible for some of the rise.

However, it must be open to question whether the Bank would have moved if the currency issue was not also demanding its attention.

The problem for the Bank will be in persuading the markets that the rise was solely a result of rising consumer credit.

Already overseas investors are questioning the wisdom of the move at a time when interest rates are supposed to be converging with Germany in the run up to EMU.

Markets also have a history of punishing currencies if they feel interest rate rises are simply to prop up a falling currency. In many cases it simply hardens traders resolve to test the currency further.

That begs the question of whether another STF hike could be in the pipeline over the coming weeks.

It will also not be good for sentiment if the markets believe that the Central Bank and Department of Finance are at loggerheads.

At times like this, Mr Quinn must be wishing the Central Bank had a little less independence. After all the Bank of England governor consistently pressed for higher rates before yesterday's British general election, but was overruled by the Chancellor of the Exchequer, Mr Kenneth Clarke every time. But of course Central Bank independence must be observed in states wishing to join the single currency.