To be clear, a focus on domestic inflation does not imply that policymakers must entirely ignore the exchange rate; particularly in small open economies, stabilization of the domestic price level may entail some “leaning against the wind” with respect to exchange rate movements, because of their influence on domestic prices.
This behavior does not imply that exchange rate stabilization is an independent objective, however; and should price stability and exchange rate stability come into conflict, it is the latter that should be jettisoned. In contrast to floating rates, fixed exchange rates - rather than being a mechanism for reducing macroeconomic instability - have often been a source of instability.