Because of this move
the exchange rate has become less central in economic policy debate in most emerging
markets. This, however, does not mean that the exchange rate has disappeared from
policy discussions. Indeed, with the adoption of inflation targeting a number of
important exchange rate-related questions – many of them new – have emerged. In this
paper I address three broad policy issues related to inflation targeting (IT) and exchange
rates that have become increasingly important in analyses on monetary policy in
emerging countries.3
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