Heres the gist of an attack on a fixed exchange rate:
with a fixed exchange rate, the government commits to keeping the rate at a specific
level. The government can maintain that level by purchasing and selling foreign
currencies in the exchange rate market to influence the level of the domestic currency.
But when the currency becomes overvalued (for example, the international commerce
market is unwilling to pay the price), the natural tendency is for the currency to fall in
price. So the government works hard to maintain the current level by selling foreign
currencies and buying the domestic currency. This causes a problem with foreign
currency reserves. In short, if the government has to keep selling foreign currencies,
at some point they are going to run out.
Speculators who believe that the currency will be devalued borrow massive amounts of
the domestic currency and quickly sell them for another currency - for example, borrow
mexican pesos and then sell the pesos in exchange for us dollars. The big sell off in
the currency continues to put downward pressure on the domestic currency price level
and at some point the government must devalue their currency.
The speculators that sold their mexican pesos for us dollars when the peso price level
was high then pay back the loan later with cheaper pesos.