The French franc closed barely half a centime above its floor in the ERM after a day of turmoil on the foreign exchanges.
The Banque de France was reported to have spent nearly half the country's reserves of foreign currency in an attempt to stop the franc suffering the same fate as the pound and Italian lira and being forced out of the system.
The French finance ministry insisted last night that 'the franc's parity with the Deutschmark is absolutely inviolable'. A spokesman for Michel Sapin, the Finance Minister, said: 'There may be speculative movements, but there are fundamental factors which mean the franc is, if anything, a candidate for appreciation'. Mr Sapin was due to fly back to Paris on Concorde last night from the International Monetary Fund meetings in Washington. Meanwhile, Germany said it was continuing to hold bilateral discussions with France and other countries.
Economists speculated that French interest rates would have to rise sharply unless the French government finally agreed to decouple its currency from the mark in the face of market speculation. The fate of the French currency is seen as the key to whether the ERM survives in anything like its current form.
Devaluation of the franc would be a catastrophic political blow to the French government just six months before it faces elections.
The Danish, Irish and Spanish central banks also launched support operations yesterday for their currencies, with those of the powerful German bloc, such as the Dutch, coming to their aid.
Unexpectedly high German money supply figures - which the Bundesbank uses as its main indicator of inflationary pressure - suggested that the German central bank was unlikely to provide the cut in interest rates that has been hoped for as a means of restoring calm to the system. Theo Waigel, the German finance minister, said interest rate reductions would follow 'decreasing price and cost pressures'.
Rumours that the ERM currencies were to be realigned imminently swept the markets during the afternoon. But top German officials denied yesterday that the mark was about to be revalued as unconfirmed reports swirled in Washington that the EC monetary committee was to meet, possibly to suspend the ERM.
Mr Waigel and Hans Tietmeyer, the Bundesbank vice-president, both ruled out a mark revaluation. 'I don't see that,' Mr Tietmeyer said. Mr Waigel also pledged that Germany would continue to meet fully its commitments in the ERM.
Francois Mitterrand and Helmut Kohl met yesterday to discuss plans for European integration after the French referendum. But the German Chancellor and the French President issued no formal statement after their meeting, despite convening a press conference. 'For me and for the President it is clear,' Mr Kohl told German television after the meeting. 'We want the ratification of Maastricht. The process must not be stopped. We want to expand but also deepen the Community.'
Asked if he wanted the treaty to be improved, Mr Kohl said: 'I am not sure it is improvements. What I have said is that there is no question of the treaty text.' The Chancellor is opposed to reopening negotiations on the treaty.
But the fate of Maastricht hangs in the balance despite the French 'yes' vote. Denmark said yesterday that it might not hold another referendum until next autumn, and gave the first indications of what additions to the treaty it might expect as the price of proceeding. Poul Schluter, the Danish Prime Minister, said he wanted more openness, limits on the power of the European Commission and greater democracy.
Some officials meeting in New York, where EC foreign ministers tried to put momentum behind treaty ratification on Monday, said they no longer believed Denmark was the biggest problem. Britain presented a far more formidable obstacle, they said, as it had been accused of trying to slow the ratification process. John Major has called for a breathing space, to consider the Danish and French referendum results.
Britain will host a summit on 16 October to discuss the future of the treaty. Several countries have tried to put a belated effort into securing popular backing for Maastricht, including Germany, where support seems to be sliding.
The treaty will have a first reading in the German parliament on 8 October. Germany wants to keep up the momentum for ratification.
Pressure for reform of the ERM stepped up yesterday when the head of the IMF, Michel Camdessus, said Europe should learn the lessons of last week: 'They can reinforce further their monetary co-operation.' He also urged 'prompt action' to cut the German and US budget deficits.
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