Impact of Shifting to Floating Exchange Rate

In the context of international finance, countries adopt different exchange rate regimes—some allow their currencies to float freely while others peg their currencies to a foreign currency or use a managed float system. These regimes can significantly impact a country's economic stability, inflation rates, and trade balance.

Consider a hypothetical country, EcoLand, which has recently shifted from a fixed exchange rate regime to a floating exchange rate regime. The central bank of EcoLand has announced that the currency will now be allowed to fluctuate based on market forces.

Which of the following is a likely consequence of this shift in EcoLand's exchange rate regime?