The Taoiseach has warned that exporters now face into a "very different" marketplace after the UK's June Brexit vote.
“This is an important time for exporters, who face a very different landscape now after the decision by the British electorate to leave the European Union,” Enda Kenny said on Wednesday, addressing the launch of Enterprise Ireland’s International Markets Week event in Dublin.
Also speaking at the event, Enterprise Ireland chief executive Julie Sinnamon said there was no doubt Irish companies were navigating through “choppy waters” following the UK vote .
The agency this week launched its “Global Ambition” campaign, aimed at encouraging Irish companies to seek alternative markets.
The initiative comes as Ireland’s exporters and tourism industry, grappling with a 16 per cent surge in the euro against sterling since the Brexit vote, face the headache of the exchange rate hitting 90p by the end of the year, according to analysts.
The euro has surged as much as 2 per cent since the weekend to a five-year high of 88.4p on Wednesday after the British prime minister, Theresa May, promised over the weekend to start Brexit talks by the end of March, sparking concerns of a so-called "hard exit" from the EU.
The single currency pulled back to 87.9p by the time European traders left their desks.
Short sterling trade
Justin Doyle, a senior foreign exchange trader at Investec in Dublin, said that a market that had been "wrong-footed" by Ms May was now being driven by participants who were "repositioning and rejoining the short sterling trade". This means that more currency investors are placing market bets that the currency will weaken even further against the euro.
“A 200-point move in two days from the mid £0.86s to the mid £0.88s in less than a week certainly means that £0.90 is in the crosshairs,” Mr Doyle said. This level, last seen in July 2011, may be tested before the year is out, he added.
Elsewhere, Swiss banking giant UBS also forecast that the euro will rise to 90p by the time this year is over.
"Something really needs to be done to protect exporters," said Simon McKeever, chief executive of the Irish Exporters Association. "This has gone up a whole level now since Theresa May's statement. It is the smaller businesses, particularly in the food and drink sector, that are really feeling the pain."
Tourism is among the economic sectors most exposed to the sterling fluctuation: British citizens account for about 40 per cent of overseas visitors to Ireland. The UK, which gets cheaper with every drop in sterling, is also Ireland’s biggest competitor for the other 60 per cent.
Alex Connolly, head of communications with Fáilte Ireland, said the State tourism agency is "closely monitoring" the currency fluctuation. It is "challenging" for Irish tourism, which is otherwise booming, he said.
Fáilte Ireland said preliminary data suggests that British tourists are already finding Ireland to be less value than it was.
