Exchange Rate Policy and Inflation Control

The relationship between exchange rates and monetary policy differs under various exchange rate regimes. Understanding the impact of different policies on exchange rates is crucial for countries navigating international trade and investment.

Consider the following countries that adopt distinct exchange rate regimes: Country A operates under a fixed exchange rate system, where its currency is pegged to another major currency. Country B utilizes a floating exchange rate, allowing currency values to fluctuate based on market forces. Finally, Country C employs a managed float, which is a hybrid system where currency values are primarily determined by market forces but with occasional government intervention to stabilize the currency.

Which country has the best potential to control inflation through its exchange rate policy in a stable economic environment?