The Department of Finance has attempted to calm money markets after Ireland's cost of borrowing rose to new highs this afternoon.
A Department spokesperson said there was 'absolutely no truth' in a market rumour that the Government may have to call in outside financial help.
At one point today, the interest rate being demanded to lend to Ireland was 6.34%.
A rumour that Ireland was close to seeking financial help from the EU and the International Monetary Fund was blamed for the rise.
But the Department says the rumour was due to a 'misinterpretation' of a research report issued by British bank Barclays Capital yesterday.
Barclays said Ireland did not need help from outside at the moment, but may do so at some future point if there were more unexpected losses in the banking sector.
This afternoon, the IMF also rejected talk that Ireland would need its help.
These movements on the bond markets are important because they could make the Government's task of cutting the budget deficit even more difficult.
The higher the interest rate Ireland has to pay, the more the Government has to set-aside each year for repayments on the national debt.
Barclays Capital note
Finance Minister Brian Lenihan said a report from the British bank yesterday said the Government was taking the right steps and had no difficulty in funding itself, though it warned that we must be 'extremely careful' about how to proceed in the future.
Barclays Capital said the Government should look at doing a deal with bondholders who are owed money by Anglo Irish Bank.
The note said a default on Irish debt was unlikely, and that Ireland did not need to draw on assistance from a joint EU-IMF emergency fund set up earlier this year.
But it did warn that the Government might need to seek outside help if, what it called, 'further unexpected losses' arose in the banking sector, or if economic conditions worsened.
Meanwhile, Fine Gael Finance Spokesman Michael Noonan has said that he is highly alarmed at the impact of Barclays' statement on Irish bond yields.
'There is no doubt that the political developments of recent days have also added to the concerns of the international markets', he said.
Mr Noonan said he disagreed with some aspects of the bank's analysis, saying he did 'not believe it is in Ireland's interest, under any reasonable scenario, to turn to the IMF for direct financial assistance.'
'The current situation would be more manageable if we had a Government with the policies needed to cap taxpayers' exposure to zombie banks and get credit flowing again in the economy to stimulate growth and job creation', he added.
