Imported or Home Grown? The 1992-3 EMS Crisis
53 Pages Posted: 23 Nov 2021 Last revised: 27 Nov 2021
Date Written: November 2021
Using newly assembled data on foreign exchange market intervention, we construct a daily index of exchange market pressure during the 1992-3 crisis in the European Monetary System, allowing us to pinpoint when and where the crisis was most severe. Our analysis focuses on a neglected factor in the crisis: the role of the weak dollar in intra-EMS tensions. We provide new evidence of the contribution of a falling dollar-Deutschmark exchange rate to pressure on EMS currencies.
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