This paper offers a panoramic view of the main theoretical contributions to the literature on the determination of exchange rates. It examines successively the hypothesis of purchasing power parity, the traditional model of flows, the assets models (in their two versions: monetary and portfolio balance) and a series of subsequent developments which have arisen as a result of the dissatisfaction with the poor empirical behaviour of the above mentioned models. Finally, the available empirical evidence for the case of the peseta is reviewed.