Irish exchange rate policy in the aftermath of the currency crisis

Brendan M. Walsh

Open Access publications from School of Economics, University College Dublin

Abstract: Sterling's departure from the exchange rate mechanism (ERM) in September 1992 precipitated a crisis for Irish exchange rate policy that was resolved, for the time being at least, by the decision to devalue at the end of January 1993. During the intervening 4 1/2 months, the economy laboured under the burdens of penal interest rates and a misaligned sterling exchange rate. The country's foreign exchange reserves were drained, to be rebuilt later at a substantial cost to the taxpayer. With the virtual collapse of the ERM at the end of July, Irish exchange rate policy entered a new phase. This paper reviews the lessons to be learned from the collapse of the ERM and the options facing us in the new international financial environment.

Keywords: Foreign exchange--Ireland; Monetary policy--Ireland; Currency crises--Ireland (search for similar items in EconPapers)
Pages: 10 pages
Date: 1993
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Published in: Irish Banking Review, (Autumn 1993) 1993

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Persistent link: https://EconPapers.repec.org/RePEc:ucn:oapubs:10197/1546

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