Irish markets thin as ailing punt eyes dollar downside
REUTER
DUBLIN, January 2: Irish markets were quiet on Friday on the first day of trading of 1998, with the ailing punt seen falling further against the dollar later in the day, traders said.Irish bonds were slightly softer, while shares edged up.The Irish pound, which weakened and broke new negative territory in the last few months of 1997, looked as if it would trade in current ranges against the mark and sterling but would fall beyond a five-month dollar low. "I expect it will be very quiet today and trade between 2.56 and 2.57 marks," said one trader. The trader said there was every chance the punt could fall through the 1997 dollar low of $1.416 on August 6 and head down as low as $1.35 before making a recovery, but any move would come after trading started in the US. The dollar was off session highs but remained firm on the back of ongoing Asian economic woes and potential fallout to Europe. Recent market perception was that the punt would drift lower regardless of whether there was a revaluation
from its current European central parity rate of 2.41 marks. The prospect of a fall in interest rates from the current 6.75 per cent as the country converged with its European Economic and Monetary Union (EMU) partners was also putting pressure on the punt, traders said. "We are going to hear more talk of revaluation over the next few months and the market is going to be very nervous," the trader said. By 1100 GMT, the punt was worth $1.4198/18, 0.8655/75 sterling, and 2.5604/54 marks, compared with the 1997 close of $1.4350, 0.8640 sterling, and 2.5599 marks on Wednesday. The bond market was equally quiet and expected to remain so as they tracked bunds lower, traders said. "We have been marked down a little bit in line with Germany but it's extremely quiet, volumes are very low and we will probably have to wait until Monday for any significant action," said one dealer. By 1100 GMT, the price of the benchmark 6.50 per cent five-year bond due 2001 had fallen 11 pence from the last 1997 trading
session on December 31 to 104.93 and yielded 4.96 per cent. The 10-year 8.00 per cent 2006 paper was down 19P to 116.50 and yielding 5.46 per cent. Irish stocks edged up in thin trade after an astounding 51 per cent increase in the index over 1997. "It's very quiet, there's no news, and the market has been fairly thin since last Friday," said one trader. The trader said a strike notice by budget airline Ryanair ground staff, who plan to stop work for three hours every shift as of January 9 if their pay and health demands are not met, would not affect the share price. Ryanair was floated on New York's Nasdaq exchange and on the Dublin bourse in May 1997 and has waged an aggressive price war against main carriers British Airways Plc and Air Lingus on services to Ireland. Its shares gradually fell from a high of 416 pence to a low of 290P on October 28, before creeping back to 333P when they were last traded. By 1100 GMT the ISEQ index was up 3.68 points at 4,057.48.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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