Conclusions

Abstract

Speculative currency crises seem to have become an inevitable and regularly occurring concomitant phenomenon of the international monetary system in which countries try to fix the price of their currency to other currencies or to a precious metal. In general, speculating agents tend to attack a currency if they believe the exchange rate commitment not to be credible in the face of different economic or political factors. Although fixed exchange rate regimes exhibit some favorable features concerning their impact on international trade and monetary discipline, they also give rise to certain risks such as the vulnerability of the domestic economy to foreign shocks or the permanent pressures of realignment. The liberalization of capital movements during the last decades has been further conducive to the increasing fragility of pegged exchange rate systems.