The government will "keep its head down" as the sovereign debt crisis that swirled around Ireland a year ago now buffets Greece and Portugal, Department of Finance sources said last week.

Government officials believe that Ireland is benefiting from Brian Lenihan's series of austerity budgets, saving Irish bonds from the sell-off that last week hit Lisbon and Madrid.

Analysts believe that the Irish economy may even indirectly benefit from the recent slide of the euro against the dollar and sterling, making it easier for exporters to sell into Britain.

The value of Greek bonds continues to fall as the cost to borrow money for 10 years continues to increase, amid market misgivings that the government there would fail to cut spending and borrowing.

The market crisis spread to other indebted so-called euromed countries, including Portugal, sending Lisbon's interest rate soaring by a third of a percent to match Irish levels at 4.8%.

Last year, speculators betting on the collapse of the Irish banks and on a bailout from the European Commission or IMF pushed the benchmark Irish sovereign interest rate to over 6.1%.

Last week shares in European banks, including Irish banks, fell sharply because they hold bonds of eurozone members.

"Dublin is keeping its head down," the Department of Finance said.

The cost of servicing mounting levels of Irish sovereign debt in January alone rose to almost €311m, almost three times the interest bill a year earlier.

Dan McLaughlin, chief economist at Bank of Ireland, forecast the euromed debt crisis could push the euro down against sterling to 83p in the next few months.