Irish alarm after punt is revalued

IRISH manufacturers and economists yesterday expressed disquiet following the surprise weekend revaluation of the Irish punt against the German mark.

On Saturday, the European Union increased the value of the punt against the mark by 3 per cent. The punt's central pivot point in the European exchange rate mechanism (ERM) is now DM2.48. Previously, it was DM2.41.

On Friday, the punt was trading at DM2.5, prompting economists to claim the European Union (EU) may not have raised the punt's value by enough. Economists are concerned that financial markets may not see the revaluation as credible.

Jim Power, of Bank of Ireland Group Treasury, said: "They [the EU] should have done it much more aggressively. A 3 per cent revaluation will achieve absolutely nothing."

Manufacturers, in contrast, believe the punt should have remained unchanged. Irish exporters had hoped Ireland would enter EMU with a relatively weak exchange rate.

Colum MacDonnell, chief executive of the Irish Exporters' Association, said the government had "given away a competitive advantage permanently".

Tom Parlon, president of the Irish Farmers' Association, claimed that farmers would lose IRpounds 170m a year.

The EU said its decision to revalue the punt followed requests from the Irish authorities. It added: "The revaluation ... will support the authorities in their efforts to keep the Irish economy on a path of sustainable growth with price stability."