This paper empirically analyzes a broad range of real exchange rate apprecia-tion episodes. The objective is twofold. First, the paper studies the dynamics of appreciations, using a sample that is not limited to cases that end in crisis (or devaluation). Second, the paper analyzes the mechanism by which overvaluations are corrected. In particular, for various degrees of misalignment we calculate the proportion of the reversions that occur through nominal devaluations rather than through cumulative inflation differentials. The overall conclusion is that in most cases large and medium appreciations are reversed with nominal devaluations. What is the probability that a currency that has appreciated significantly in real terms will require a nominal devaluation? The relevance of this question is easier to understand in the context of recent failed attempts to manage nominal exchange rates. A large number of countries have used the exchange rate as an instru-ment to stabilize inflation and coordinate expectations around an easy focal point. However, with inflation higher at home than