The 'Black Monday' experienced in China's financial markets yesterday could have implications for Irish exports in the weeks and months to come.
On the back of what was dubbed the 'Great Fall of China', the euro hit a six month high against the yuan, with experts believing that the exchange rate could grow higher in the days to follow.
A strong euro could hamper efforts to grow Irish exports to China, which accounted for €520 million worth of Irish food exports in 2014, according to Bord Bia, a rise of 40% on the previous year.
China is now Ireland's second biggest market for both dairy and pigment.
In February of this year, the Chinese government approved access for Irish beef, which it was hoped would lead to a boom in beef exports to the Asian country. This was followed by a visit of Chinese Prime Minsiter Li Keqiang to Ireland in May.
According to current CSO data, while beef exports to China were up in the first half of the year, the majority of this comprised so-called 'fifth quarter' products such as edible offal.
Commenting on the euro's new-found strength against the yuan, Jane Foley, senior currency strategist, at Rabobank told Yahoo Finance, "The trade was encouraged by dovish rhetoric from ECB President Draghi and then by the start of quantitative easing from the governing council. Now that capital is flowing out of emerging markets, these trades are being unwound and the euro is finding very strong support."
© 2015 - Checkout Magazine by Stephen Wynne-Jones
