The 1990´s could be characterized as a time in which both developed and emerging countries suffered important episodes of exchange rate instability; some of these periods resulted in exchange rate devaluations and others in important exchange rate depreciations. We are interested in understanding and explaining such moments of turbulence in order to avoid or even forecast future crises. Against this background, this paper focuses on the study of the different moments of speculative pressures in Europe, and particularly on the peseta, during the target zone period. We shall use a binary dependent variable model (logit method) to estimate the readjustment probability in a target zone and show that this methodology is appropriate. Besides, we introduce the posibility of a soft target zone (+ - 6% ERM band during all the sample), thus allowing the exchange rate to move within wide margins in the short-run, but within narrow margins in the long-run.

Key words: target zones, currency crises, readjustment probability.
JEL classification: F31.