If the central banks were assigned an exchange rate target in addition to the objective of price stability, considerable conflicts could arise between these two objectives, a point that has been proved especially by events in Asia and Latin America over the past few years.
Of course, this does not imply that exchange rate developments must not be carefully monitored and taken into consideration while shaping monetary policy. The exchange rates are an important element of inflation forecasting because they help determine the climate of stability through the import prices, and the state of business activity through foreign trade.