How did ERM II affect the determination of the Maltese lira exchange rate against other currencies?
Whereas the value of the Maltese lira was previously fixed in terms of a basket in which the euro, the pound Sterling and the US dollar carried weights of 70%, 20% and 10% respectively, the value of the Maltese lira during ERM II was fixed in terms of the euro at MTL0.429300 per euro. During ERM II, since the Maltese lira was pegged to the euro, its value against other currencies varied according to how the euro itself moved against these currencies on international foreign exchange markets. From 2 May 2005 till the end of December 2007, the Central Bank of Malta quoted rates of exchange against the major currencies at the opening of business daily on the basis of cross rates between the euro and these currencies, in accordance with the central parity rate.
