However, we were conscious that an exchange rate adjustment would have to take place at the time of joining the ERM I, so as to offset the loss of external competitiveness reflecting the previous few years of real appreciation of the drachma.
But there is no mechanical relationship between the level of the most frequently quoted measure of the exchange rate - the rate against the US dollar - and the future domestic price level. For a start, the price effects are better approximated by the trade-weighted index.