Chaos in The Currency Markets : Currency Crisis of The EMS 1. What does the crisis of September 1992 tell you about the relative abilities of currency markets and national governments to influence exchange rates? The currency markets and national governments both have abilities to influence exchange rates. Like other financial markets, foreign exchange markets react to any news that may have a future effect. Speculators are the part of the currency markets that take currency positions based on anticipated interest rate movements in various countries. Day-to-day speculation on future exchange rate movements is commonly driven by signals of future interest rate movements. By using the signal, speculators usually take the position before the things actually occurred. Sometime, if high power enough, the speculators position can influence the exchange rate....

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