It's Friday and time for the weekly rumour that a revaluation of the pound's central ERM rate is in prospect. Yesterday the speculation in international markets reached a new peak, as the highly secretive EU monetary committee of finance officials and central bankers met in Brussels. So far the rumours have proved incorrect. And again, yesterday, sources close to the monetary committee confirmed that no discussion of the pound was on the agenda. But it is unlikely to stop the speculation rising again late next week. Weekends are the traditional time for ERM currency changes. The Department of Finance press office in Dublin has received "dozens" of calls in recent weeks to check out the rumours.

Speculation has been strongest in the London market, although there have been periodic rumours in Dublin too. Official sources in Dublin continue to firmly play down the speculation of an early revaluation move and most market analysts believe it would be a risky strategy, as revaluing the pound's central rate would leave the currency exposed if sterling were to fall sharply in value.

The reason for speculation on an ERM revaluation for the pound is clear. At the moment the pound is trading 11 per cent above its central rate in the ERM band. If central ERM rates are used to set the exchange rates at which currencies will be locked together in EMU, using the current rate could mean the pound falling very sharply in value.

But the argument is complicated by uncertainty over sterling's value. If the British currency continues to steam ahead, the Government may have little option but to consider revaluing the pound's central rate. But if the pound is revalued and sterling subsequently collapses, the pound could end up overvalued on average against our trading partners. Despite the risks of revaluation, the rumours circulating of an early decision on the method of fixing EMU exchange rates will mean that the phone in the Department of Finance press office will remain busy for many Fridays to come.