Thursday, 19 July 1973
Dáil Eireann Debate
Dr. O'Connell: asked the Minister for Finance if any discussion is taking place with the British and other governments on devaluation of the Irish pound in the light of the present monetary crisis; and if he will make a statement on the matter.
Mr. R. Ryan: As the Deputy will appreciate, the Government are involved in discussions with the other Ministers of Finance in the European Community. This is the level at which these discussions are taking place, and there are also on-going discussions with the Governors of the Central Banks of Europe. Later this month I will be in discussion with the Ministers of Finance of 20 nations in Washington, but we are having no direct discussions of the type envisaged by the Deputy.
Mr. R. Ryan: It would be important—and I am sure the Deputy would agree with me on this—that people should understand that the Irish £ is not itself depreciated as against sterling because it is operating on a £ for £ basis with the £ sterling, and there is no disadvantage as far as the Irish £ is concerned vis-á-vis the £ sterling.
Mr. Haughey: Would the Minister, in order to clear up some public misinformation on this subject, be prepared to state that if the Irish £ were to be divorced from the £ sterling it would, in all probability, go to a premium?
Mr. R. Ryan: I agree with the Deputy that the position about the Irish £ is that if it were to float free of the £ sterling it would be at a premium compared with the £ sterling. However, there are in the present monetary situation more advantages flowing to us from this link with  sterling than there would be if we were to part from it.
Mr. R. Ryan: With your permission, a Cheann Comhairle, I propose to take Questions Nos. 94, 95 and 96 together. Since the one-for-one parity of the Irish pound with sterling is being maintained and there has been little change in the rate of exchange with the US dollar, the bulk of our trade is not directly affected by the exchange rate changes which have taken place.
The depreciation of the pound against a number of Continental currencies increases the competitiveness of Irish goods and services. This should lead to an increase in our exports to these countries and tend to reduce our imports from them. The increase in the cost of imports due to the German revaluation will depend on the pricing policy adopted by German exporters.
Dr. O'Connell: Is the Minister aware that a surcharge of 5 per cent has been put on the contracts of people going abroad on holiday travel? If the depreciation is only as the Minister says, does he not think that this 5 per cent increase is unwarranted?
Mr. R. Ryan: The situation varies greatly from one country to another. For instance, the depreciation against EEC currency varies from 1 per cent in the case of Italy to 25 per cent in the case of Germany, and 15 per cent to 20 per cent in the case of other countries in the EEC. When it is considered that the principal factor in our external trade is our trade with Britain, where we have parity with the pound sterling, it will be seen that the overall consequences are of the order of 4½ per cent. Where a person might be going on holiday to a country which has revalued considerably as against our own currency, the factor could be of the order of 5 per cent or in some cases a good deal more.
Mr. R. Ryan: There has been some deterioration in the position of the pound sterling in recent weeks and some improvement. As the Deputy knows, there was a revaluation of the German mark which significantly increased the cost of holidays in Germany.
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