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The French Franc and European Monetary Crisis

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  • Didier, Marcel

Abstract

The currency crises of 1992 and 1993 have shown that extremely strong pressures can be exerted on official parities when investors realize that significant monetary realignments may be imminent. In this paper, I present an empirical analysis of the 1992-1993 crises in order to determine whether speculators are able to predict exactly when devaluations will occur, and whether information on current events political and economic influence their expectations and if so, in what way. In particular, I analyze the expectations of the date of the devaluation of the French franc against the Deutsche Mark before the 1992 and 1993 monetary crises. The empirical analysis shows that before the outbreak of these two crises, Investors realized that the devaluation was imminent and that they were very sensitive to the information disseminated daily on the markets.

Suggested Citation

  • Didier, Marcel, 2004. "The French Franc and European Monetary Crisis," MPRA Paper 90504, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:90504
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    References listed on IDEAS

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    4. Svensson, Lars E. O., 1992. "The foreign exchange risk premium in a target zone with devaluation risk," Journal of International Economics, Elsevier, vol. 33(1-2), pages 21-40, August.
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    More about this item

    Keywords

    Currency crises;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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