THE pound has hit its lowest level against sterling in almost six years following heavy selling by speculators scrambling to get out of many European currencies. An estimated £200 million was sold yesterday amid growing uncertainty in France and Germany about their ability to qualify for EMU.
The pound closed at 90.55p, losing 1.5p since last Friday. Although good for exporters and farmers, the pound's continuing weakness could lead to further pressure for an interest rate rise.
International speculators have been buying sterling and the dollar in an attempt to reduce their exposure to the likely euro currencies. As a result, the pound has suffered and economists have warned that it could fall further.
The currency market uncertainty has been prompted by the Bundesbank's refusal to agree its government's plan to revalue the German gold reserves and by the election of the socialists in France.
This was despite protestations from Ms Elisabeth Guigous, tipped to be the French EU affairs minister, that the new government would stick to the euro timetable.
Reports that the German government and the Bundesbank are close to resolving their dispute by agreeing to postpone the transfer of profits from the revaluation until next year failed to help the German currency. The compromise, a humiliating climb-down for the government, would mean the revaluation could not be used to help Germany qualify for entry to the single currency.
In a further blow to the project, Sweden's ruling Social Democrats ruled out membership in the first wave but left the door open for possible membership later.
London traders who had bought the pound on Friday following rumours that the Government was considering a revaluation simply sold again when this failed to materialise, Mr Jim Power, chief economist at Bank of Ireland said. Mr John Beggs, AIB group treasury chief economist, said the pound could fall further rather than move higher.
"If sterling strengthens again there is nothing to stop the pound falling through 90p," he said. "The only way back to 95p is if a British cabinet minister says they are considering entering the single currency or states that sterling is uncompetitive at current levels."
The risk is that the pound's low levels could feed through to inflation. The May inflation data is due next week and will be watched closely for clues as to whether any inflationary pressures are building up. Any sign of a pick-up could lead to higher interest rates, Mr Beggs said.
Wholesale interest rates moved up slightly yesterday to 6 3/8 per cent. The market pushed up rates because it is worried about the Central Bank raising interest rates again to head off the inflationary damage.
Mr Power warned that the lower the pound went the more likely rates would be to rise. "If the pound does fall through 90p, the Central Bank will be worried about inflation and could raise rates again." (Additional reporting by Den is Coghlan)
New study reveals radioactive gas level in homes top limit
By DICK AHLSTROM
Science Editor
AN ESTIMATED one in five homes in much of counties Sligo, Wexford and Carlow exceed safety limits for the radioactive gas, radon, according to a new study.
Between 5 and 20 per cent of dwellings across much of south and central Leinster also have excessive levels, based on a report published yesterday by the Radiological Protection Institute of Ireland.
The survey involved the measurement of radon gas in selected houses in 14 counties including Carlow, Donegal, Kildare, Kilkenny, Laois, Leitrim, Longford, Meath, Offaly, Roscommon, Sligo, Waterford, Westmeath and Wexford.
The Department of Transport, Energy and Communications has established an action limit for homes of 200 becquerels (200Bq) per cubic metre of air. A becquerel is a unit of radioactivity, and action to reduce radon is recommended at levels above 200.
The institute's survey revealed levels at almost eight times the action level. One Co Carlow home measured 1,562Bq, and levels of 1,387Bq, 1,359Bq, 1,124Bq and 1,114Bq were measured in homes in counties Roscommon, Waterford, Wexford and Kildare respectively.
Radon is a naturally occurring odourless, colourless gas that seeps from the ground. It can accumulate in dwellings, causing a radioactive exposure to residents.
High radon represents a significant health risk, the institute warned. A lifetime exposure at 200Bq puts the risk of contracting lung cancer at one in 50, and people who smoke are at greater risk, it said. Up to 10 per cent of Ireland's 1,500 annual lung cancer deaths are thought to be attributable to radon, according to the institute.
"It is quite well recognised that exposure to high levels of radon increases cancer risks," according to Dr Ann McGarry, the institute's principal scientific officer.
The survey measured radon over a 12-month period in 3,482 dwellings distributed over the 14 counties. Of this sample, 285 houses had radon concentrations above the action level.
The test area was divided into grid squares of 10km each and at least five homes were tested in each square. Statistical formulas were then used to estimate the number of homes thought likely to be affected by radon.
Dr McGarry expressed concern that "a significant number of people may be exposed to high radon levels, particularly in the south-east and Sligo, and would urge householders in all high radon areas to have their home tested".