Sterling is on the slide against the euro as uncertainty over the UK’s referendum on membership of the EU impacts currency markets.
Today, Sterling is trading at 78p to one euro, this compares to 70p which it traded at for much of 2015. The consequences of this movement in currency are significant for Irish agri-food exports.
It comes as British Prime Minister David Cameron agreed a deal with his colleges in Europe to secure Britain’s future in the EU. However, this week has seen high profile members including London Mayor, Boris Johnson of Cameron’s Conservative Party come out against the deal.
According to Bord Bia, with 41% of Irish Agri-food exports going to the UK and 28% to markets that predominantly trade in US dollars, any change in exchange rates of both currencies has the potential to impact on competitiveness.
The euro weakened by a further 10% relative to sterling in 2015, while a 16% decline relative to the US dollar was recorded.
In December 2015, the euro was over 12% and 8% weaker against the US dollar and sterling respectively. Bord Bia has highlighted how these developments have helped to boost the competitiveness of Irish exports.
It says the combined impact of the weakening in the euro relative to sterling and the US dollar is estimated at almost €950m.
The euro also weakened by 15% against the Chinese yuan while a marginal decline was recorded against the New Zealand dollar. In contrast, the strengthening of the euro relative to the Russian rouble and Brazilian real continued with the euro 37% and 17% higher respectively.
Bord Bia says this reflects the ongoing trading difficulties with Russia and this combined with trade suspensions continues to have a negative impact on trade from Ireland.
Bord Bia had said the anticipated economic developments in these regions over the next 12 – 24 months suggests ongoing weakness of the euro relative to sterling and the US dollar.
It says this should help to maintain competitiveness of Irish exports, although it will also have the impact of pushing up import prices for inputs and raw materials