Finance ministers from the main industrial nations are expected today to send a strong message of support for the euro to the markets, in an effort to give further aid to the beleaguered currency.
This follows a dramatic move by the world's most powerful central banks which joined together to spend billions of dollars to buy the euro and boost its value yesterday. This is the first concerted effort by international policymakers to take action to support the currency and reverse its slide and is thus seen by market analysts as a significant move.
The intervention is aimed at putting the euro on a firmer footing and halting its sustained fall.
A revival of the euro would help to ease inflationary pressures in the Irish economy, as the fall in the currency has been a key factor in pushing up import prices.
Further good news for the Irish inflation outlook came with the news that US President Bill Clinton had authorised the release of 30 million barrels of oil over 30 days from US emergency reserves in a bid to reduce pressure on oil prices.
The euro gained four cents to $0.90 minutes after the US Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England intervened in the foreign exchange markets spending billions of dollars to buy the euro.
It drifted lower subsequently, ending the day at $0.8803.
Although still close to its all-time low of $0.8459, analysts suggest the intervention has now signalled that the euro may not fall below these levels again in the near future.
International policy-makers will hope that the move has now established a floor or bottom value of around $0.85 for the euro.
The Republic is the European economy which suffers most in terms of inflation when the euro is at its weakest, because almost 80 per cent of our imports come from outside of the euro zone - mainly from Britain and the US. Yesterday's intervention, the first of its kind since 1995, was orchestrated by the ECB with the other central banks agreeing to the move because of concerns that a weak euro could have an adverse affect on the world economy.
The markets anticipate some more intervention to further support the euro.
Historically, intervention has tended to have a short-lived effect, but psychologically it has sent a message to the markets that the euro will not always fall.
The intervention immediately shifts the focus of the G7 finance ministers' meeting, which is now likely to produce a strong statement in support of the euro. The currency has lost nearly 28 per cent against the dollar since being launched in January 1999.
ABN AMRO economist Dr Dan McLaughlin said if the euro has now found a floor value and oil prices have peaked the outlook for Irish inflation is much improved.
Bank of Ireland economist Mr Jim Power suggests, however, that the latest efforts to support the euro are not sufficient to ensure any long-term firming of the currency.
"It is not going to work unless it is backed up by further aggressive intervention," he said.