Suppose that country A has a managed float exchange rate regime that follows the US dollar. The country is experiencing an export boom and the main trading partner is the US. What do we expect to happen to the local currency over the long run? According to which theory? Which institution will try to avoid the appreciation or depreciation of the currency? What are the main available policy options and how do they work in order to avoid the change in the currency value? Which one do you think will be more effective? Will the preferred measure have consequences for inflation and growth?