Understanding, after the event, what has driven the exchange rate is one thing, but reliably forecasting it, or using monetary policy to influence it, is quite another. What we constantly do, however, is to look behind developments in the exchange rate.
We want to understand as well as we can what has been going on and why, and we continually test our reasoning and judgements to ensure that our monetary policy decisions are not unnecessarily exacerbating exchange rate changes. This prudent and sensible approach has in fact been written into our mandate - the Policy Targets Agreement with the Minister of Finance - since 1999.