The escudo was in turmoil between the summer of 1992, a few months after it entered the exchange rate mechanism (ERM) of the European Monetary System (EMS), until March 1995, when the last parity adjustment was set to its death. With Portugal’s entry into the eurozone. During those four years, there were five exchange rate crises, but the last one was much milder, with the escudo partly “detached” from the infection of the Spanish peseta. “The markets accept the Iberian divorce. The shield is able to jump out of the shadow of the peseta, ”says Expresso.

The political decision was evident in Lisbon, even if forced by another Peseta crisis. “Together with the Bank of Portugal (BdP), which conducted monetary policy, the Portuguese government decided to observe the devaluation of the peseta by only 50%,” recalls Eduardo Catruga, then finance minister in the last government led by Cavaco Silva, which was already at the end point. “It was a critical moment, but it was overcome,” the economist sums up in an interview with Expresso (see article below). The central valence of the system’s escudo was corrected downward by 3.5% and the peseta by 7%. This was the lowest devaluation by escudo in the parity system after it lowered it by 6% during the November 1992 crisis and 6.5% in the May 1993 crisis (see table). Meanwhile, the Italian lira exited the exchange rate mechanism regime in 1992, the Irish pound had a one-time parity reduction of 10% in February 1993, and the peseta had already revised parity three times, in 1992 and 1993.

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