Ireland agrees to financial rescue package from EU, IMF

NEW YORK (Forex News Now) – The Republic of Ireland has agreed to accept a bailout package from the European Union and International Monetary Fund, Prime Minister Brian Cowen confirmed Monday.

The exact amount will be confirmed during negotiations in the coming days, although Finance Minister Brian Lenihan said it would be less than 100 billion euros.

Lenihan said the package should allow Ireland to return to the international bond markets very quickly.

Once referred to as the Celtic Tiger for its strong economic growth, this current crisis has been triggered by an ongoing recession and the almost total collapse of Irish banks, according to analysts.

Ireland becomes the second euro zone country to seek a bailout this year after Greece accepted a package worth around 110 billion euros from the EU and IMF last May.

The euro had risen against the dollar in European currency market trading by 12:00 P.M. GMT Monday, hitting 1.3690, up 0.11 percent on the day.

Here is what Daily FX currency analyst David Song observed with regards to the Irish bailout: “With the European debt crisis taking center stage, the developments surrounding Ireland’s bailout is likely to move the markets, but any bullish reactions in the Euro will not be sustainable as market participants speculate Portugal and Spain to seek aid from its neighboring countries.

“At the same time, there is likely to be increased pressures on the European Central Bank to support the real economy in 2011 as the governments operating under the fixed-exchange rate system struggle to manage their public finances, and the Governing Council may put its primary mandate to ensure price stability at risk as it aims to restore financial stability.”