The analysis of the day-by-day evolution of currency markets often emphasises the relationship between the behaviour of the US dollar and that of the exchange rates between the other major currencies, in particular the tendency of EMS currencies to appreciate vis-�-vis the DM in periods of...

Using a simple method, based on forward interest spreads, we analyse the recent movements in the 10-year yield differentials between three currencies (Italian lira; Spanish peseta; Swedish krona) and the DM in order to gauge the extent to which the reduction in these differentials was due to...