Portugal had no coherent monetary policy for some years after its revolution in 1974, but from the late 1970s began to pursue exchange rate targets with increasing commitment and effectiveness, as financial reform led to improved monetary control.

Years Targets and attainment Classification
1974-77 no exchange rate or monetary targets, recurring depreciation, high monetary expansion largely driven by budget deficits, negative interest rates; instruments not effective, objectives unclear unstructured discretion UD
1978-90 currency set to depreciate against basket at gradually decreasing rates; sometimes rate of crawl raised and/or interrupted, basket revised; step changes in exchange rate 1978-83 but not thereafter; monetary policy initially dependent on credit ceilings, but interest rates slowly become more important; recurring fiscal dominance issues LCERT
1991-94 crawl ended, peg to basket late 1990, then April 1992 into EMS with 6% bands; devaluations November 1992 and May 1993; bank lending ceilings abolished 1990, monetary instruments now mainly indirect; central bank independence improved LERT
1995-98 currency stable in EMS after small devaluation March 1995, with smaller margins FERT
1999-2014 membership of European Monetary Union currency union CU

Selected IMF references: RED 1978 pp32, 34-6, 64; RED 1982 pp 39-42, 54; RED 1984 pp47-8, 75-6; RED 1987 pp73-4, 81-3, 100-101; RED 1988 pp58-9, 64-5, 82-3; RED 1990 pp49, 58; SR 1991 pp3-5, 8-10; SR 1993 pp3, 8-9, 12; BI 1993 pp13-16; SR 1996 pp8-9, 14-15.

Additional source: Houben (2000, especially pp228-30, 318-19).

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