Chapter 162: The Spanish Beauty
When Aaron set off for Venice, Italy, with Jennifer Connelly to attend the film festival, sparks finally began to fly in the European foreign exchange markets.
The first to react to Germany's interest-rate hike was the Finnish markka. The Finnish markka had long been pegged to the German mark, and after Germany raised rates, Finnish investors began exchanging markkas en masse for German marks.
By September, however, the markka's exchange rate against the mark kept sliding. To maintain the peg, the Finnish central bank was forced to sell German marks and buy back its own currency. But the decline showed no sign of stopping. With its reserves rapidly depleted, the Finnish government abruptly announced that the markka would be decoupled from the German mark and allowed to float freely.
Once Finland officially abandoned the peg, governments led by Britain, France, and Italy immediately sensed the seriousness of the situation. They jointly urged Germany to lower interest rates, but Berlin dismissed the move as insignificant and rejected their proposal.
In Venice, at a reception for Scent of a Woman, Al Pacino, Matt Damon, and other cast members were enjoying the festivities. Aaron, however, was back in his hotel room, watching the news.
Reclining in a large bathtub, Aaron followed the economic reports on television. Moments later, the strikingly beautiful Jennifer Connelly rose from the water and nestled into his arms, kissing him softly. Her curvaceous figure pressed close against his chest.
"What are you watching, darling?" she asked, her arms wrapped around his neck.
Aaron smiled, kissed her back, and gently caressed her before replying, "Italy's lira is in trouble. The exchange rate keeps falling—it's already hit the lowest limit allowed under the European Exchange Rate Mechanism."
Even after Italy raised its discount rate twice in recent days and dumped marks and francs onto the forex market, the effort had proven futile.
Jennifer nuzzled against him. "The lira has always been a weak currency in the European system. And Britain, France, and Italy haven't been doing well economically these past few years."
Leaning back against the tub, Aaron closed his eyes, enjoying Jennifer's attentiveness while contemplating the looming pound crisis. It felt close—very close.
The next day, the Italian government was forced to announce a devaluation of the lira, lowering its parity by 3.5 percent, while the other ten currencies in the European system were adjusted upward by the same amount. It marked the first realignment of exchange rates within the system since January 12, 1987.
Only after Italy took the initiative to devalue did Germany finally make a small concession to preserve the system's stability. The day after the lira's devaluation, Germany announced a half-point cut in its discount rate—from 8.75 percent to 8.25 percent—the country's first rate cut in five years.
Following the Scent of a Woman promotional events, Al Pacino departed Venice and returned to the United States.
Aaron, however, remained in Italy, closely monitoring the unfolding currency crisis.
As expected, on the day after Germany's rate cut, international speculators—led by the Quantum Fund—launched a full-scale assault on the British pound.
Massive sell orders flooded the market.
The pound plunged, breaking through three defensive lines and falling to 1 pound = 2.78 Deutsche Marks.
Panic spread through the British government.
On the third morning, authorities announced a sudden 2% interest rate hike.
Just hours later, they raised rates another 3%, pushing interest rates from 10% to an astonishing 15%.
Such a double hike in a single day was unprecedented in modern British history.
The goal was clear: attract short-term foreign capital, boost demand for the pound, and stabilize the exchange rate.
It failed.
That same day, the pound fell further—from 1 pound = 2.78 marks to 2.64 marks.
Against the dollar, it plunged from 1 pound = $2.08 to $1.73.
That evening, Britain's Chancellor of the Exchequer officially announced the UK's withdrawal from the European Monetary System, cutting interest rates by 3%, then by another 2%, returning them to the original 10%.
Italy soon followed.
Despite burning through 40 trillion lire in foreign exchange reserves, Italy failed to halt the lira's collapse and was forced to announce its withdrawal from the EMS, allowing the currency to float freely.
After an emergency meeting, European Community finance officials agreed to allow Britain and Italy to temporarily exit the system.
Spain followed suit, devaluing the peseta by 5%.
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At the Venice Film Festival's closing banquet, Aaron was locked in a heated kiss with Jennifer Connelly inside a restroom.
"You've been in an exceptionally good mood these past few days," she murmured, half-undressed as she sat atop the sink, pulling his head close.
Aaron laughed softly.
"Of course I am. I shorted the pound in New York."
Jennifer gasped and collapsed into his arms.
"Mm… let's go back to the room."
Moments later, she slid down from the counter and knelt before him…
---
Some time later, Aaron exited the restroom first and headed back toward the banquet hall.
In the corridor, he accidentally bumped into a woman in a red evening gown—sensual, striking, with unmistakably Latin features.
"I'm sorry—are you okay?" Aaron asked, instinctively steadying her.
"I'm fine, thank you," she replied, staring at him in disbelief.
Then recognition dawned.
"You're the lead actress from that Spanish film Jamón Jamón, right? Your name is—"
"I'm Penélope Cruz," the woman said with a smile.
"I'm from Spain, Mr. Anderson."
She was only eighteen.
Jamón Jamón—a bold, sensual Spanish film—had been her debut.
Her performance was daring, passionate, and unforgettable.
Directed by Bigas Luna and co-starring Javier Bardem, the film explored tangled relationships across two generations and earned a Golden Lion nomination at Venice.
Aaron and Jennifer had even watched it together in a theater.
The world, it seemed, was full of beautiful coincidences.