Sterling's continuing strength is making the county more popular than everwith visitors from the North, writes Derek O'Connor

Back in the 1980s, a time when rigorous belt tightening was the order of the day, a trip up north offered the southern shopper access to a thrifty consumer's nirvana. Hordes of savvy punters hit Belfast, lured by the massively advantageous exchange rate that was a by-product of the financial catatonia afflicting Margaret Thatcher's Britain.

Closer to the border, however, shopping in the six counties had long been a given. "I grew up in Raphoe," says Martin McGinley, editor of the Donegal Democrat, "and my family always did all our weekly shopping across the border, in Strabane.

"Then, when the Troubles started, a lot of that traffic eased off. The chance of being blown up was a bit of a natural deterrent for doing your groceries there. It didn't seem to bother people from further afield as much. People from Donegal have always shopped in Strabane, in Derry, in Belfast - it's only a recent thing that it's the other way round."

Buoyed by political progress and renewed investment, cities such as Belfast and Derry have experienced a remarkable renaissance, but in recent years the tide of shoppers has turned in the other direction.

Sterling's robust performance against an uncertain euro has seen thousands of Northern shoppers take their business to Donegal's highways, for everything from electrical goods to a slice of the property market. Although a recent Bord Fáilte survey revealed that fewer than half of visitors to Ireland last year felt they were getting value for money, the Republic is a steal for the average sterling wage earner.

The price of a tank of petrol alone makes the journey worthwhile. At sterling-accepting stations in Muff, a few miles across the border, the average litre of unleaded will set you back 65.9p, with a litre of diesel at 62.9p. In Derry they cost well over 80p, or €1.20.

The clearest indications of the border are therefore the massive roadside petrol stations; in and around Bridge End, at the border on the main Derry-Donegal road, you'll find half a dozen of them. "The business there is absolutely unbelievable", says Hugh Whoriskey of Whoriskey Oils, which is based in nearby Ramelton. "There's a constant stream of cars and trucks queuing for petrol, day and night. Time was it was the other way round, where everyone would go north for petrol and there were no stations around the border at all. Now every single one of the Northern stations past the border has closed, and they're all opening up over here again. Things have changed that dramatically."

Indeed, the border petrol stations have been the subject of some controversy in the north-west, thanks to price hikes seemingly designed to squeeze a few more pence out of sterling customers.

"Fuel might be more expensive at the border sites compared to what you might spend around the rest of rural Donegal," says Whoriskey, "but if you're nipping over from Derry, like most of their business is, you're not going to complain about a few pence. There's still a hell of a saving to be made."

Not that Northern businesses are losing out entirely. Anyone doing business on both sides of the border these days, for example, is more than likely taking advantage of another nifty cost-cutting measure: owning a pair of mobile phones, one on a UK network, the other on an Irish one.

"The roaming costs are considerable," says Paddy McFeehily of In Phone, a Letterkenny-based business. "For one customer to use his Irish mobile, be it 086 or 087, in the North they're paying to receive on each call, and it can be anything from 40c to €1.20 per minute. It's a colossal leap.

"Again, for people from the North to phone you on a southern phone, that's very expensive to them as well. The coverage leaks a bit both ways, because transmitters don't know anything about a boundary, but there are a lot of people commuting regularly, from both sides of the border, so it just makes for common sense to run two phones.

"It's beneficial for business, too: people will always be a lot quicker to phone a number they know won't cost them a fortune."

Donegal tourism officer Dennis Doyle says: "With the exchange rate as it stands, the benefits for people coming into Donegal from the North are enormous. They come for the petrol, they're buying Lotto tickets, they go shopping, eat in our restaurants - it goes from there.

"Then, of course, in terms of tourism every town is doing more trade. Whereas once there might have been a lot of activity during the summer months, now it's increasingly busy all year round."

The wider implications can't be ignored: in recent years, Donegal has enticed a new generation of Northerners across the border to purchase houses and holiday homes at thrifty prices - to the point at which the previously modest Donegal property market has in some cases accelerated beyond recognition.

"At this point, demand has completely outstripped supply," says Brendan McGee of the Paul Franklin Associates estate agency. "People are landing in every day, asking: 'What have you got for me?' We can't get our hands on properties fast enough. There's never been anything like this."

Today, a new three-bedroom home in Donegal costs between €145,000 and €150,000. That might seem reasonable nationally, but with prices in the north-west rising by about €10,000 in the past few months alone, it's a cause of concern locally. With the average price of a similar property in Derry at about £65,000 or £70,000 - or about €100,000 - the Republic's property boom has finally made Donegal living a relatively pricey proposition.

With sterling holding strong against the euro, the north-west will continue to reap the financial benefits for the foreseeable future. "If things get cheaper in the North, people are going to stay there, absolutely," says Martin McGinley, "but that's been a historic problem here in Donegal. Take a place like Lifford, for example: that town has gone from boom to bust and back, from everyone doing their shopping in Strabane to, when the punt was strong, everyone keeping their money local, then back to absolute stagnation - and now this sustained boom, where an awful lot of people have never had it better. The danger would be to take it for granted."