The devaluation - the fourth reshuffling of the ERM in five months - came after the Irish government gave up its long fight to defend the currency against speculators. Similar attacks forced sterling and the Italian lira out of the ERM last autumn, although last night the Employment Minister, Ruairi Quinn, said the punt would remain within it.
Last week's cut in British interest rates was the final blow, as sterling's reduced value made Ireland's vital exports to Britain less competitive. Mr Quinn told Irish radio: 'We are here not because the Irish economy has suddenly nosedived. We are here because of a series of decisions . . . some reflect Britain's basic antipathy towards European union.'
The devaluation will raise concern that speculators may now turn to the core currencies within the system, particularly the French franc whose continued presence in the system is seen as the key to its survival.Reuse content