In discussing the Bretton Woods system, Michael Klein, an economist at Tufts University, observes: Investors face a

Question:

In discussing the Bretton Woods system, Michael Klein, an economist at Tufts University, observes: “Investors face a ‘one-way bet’ against central banks when they perceive an increased likelihood of a devaluation.” In other words, investors will win if the country devalues, while not losing if it doesn’t devalue.
a. How would speculators win if a country devalued under the Bretton Woods system?
b. Why wouldn’t investors lose if the country didn’t devalue under the Bretton Woods system?
c. Does your reasoning in parts (a) and (b) apply to any fixed exchange rate system? Briefly explain.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...