I do not intend to venture into the debatable territory of the magnitude, direction and exact nature of the impact of exchange rate movements: notice the debate on the impacts of a weak Euro or a strong Dollar. But that there is an impact is undeniable.
Equally important is the impact on the sentiments which often drive reactions in the public, the press and even among those who are supposed to know better. 17. This brings us to the other impact, that is, on the monetary management of the economy. The Mundell-Fleming “Trilemma” is well known.