Ireland has been caught off-guard by the rise in the use of foreign exchange rates in recent weeks.

The currency market is expected to see an unprecedented rise of up to 5 per cent in the next two weeks.

What has the currency industry been saying about this? 

There has been an extraordinary surge in the cost of the Irish dollar, which is now around $1.30 to the euro. 

This means that for some transactions, such as buying and selling goods and services, you need to pay more in cash.

This has led to a spike in the prices of goods and has led some businesses to stop accepting foreign currency payments altogether. 

The Irish Government says the use and volatility of foreign currency is an issue for the country, but what is it really? 

Foreign exchange is the process by which the government or the central bank purchases and stores foreign currency in the country’s foreign exchange reserves.

The Irish Government reserves around 40 per cent of its foreign currency reserves and that is just the amount of the currency held abroad. 

What are the risks to the currency market?

The price of the euro has been in steep fall in recent months, from a peak of around €1.25 to below €1 in the middle of March. 

Since then, the currency has fluctuated between €1 and €1, but now it is hovering around the €1 mark, with a potential of hitting €2.5. 

According to The Irish Central Bank, the Irish currency has lost more than €1 trillion in value over the past six months. 

Is the Irish economy in trouble?

As well as being affected by the use by the Irish Government of foreign currencies, the economy is also suffering from a massive increase in inflation. 

Inflation in Ireland is currently running at nearly 100 per cent, which means that in some cases, inflation is rising above the national inflation rate. 

If inflation rises, the value of the local currency will also rise. 

When will it stop?

According to the Bank of Ireland, the rate of inflation will begin to slow down after the end of the first quarter of 2020. 

Can I buy the Irish pound now?

If you do not have a bank account in Ireland, you may be able to buy the pound using your credit card.

The Bank of England has issued guidance that banks should be cautious about accepting foreign currencies as payment for goods and to look out for the presence of a UK or European bank account on the balance sheet of any company that is buying or selling goods.