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Suppose Japan wishes to maintain its exchange rate with the U.S. dollar at ¥100 = $1....

Suppose Japan wishes to maintain its exchange rate with the U.S. dollar at ¥100 = $1. It would also like to attract foreign investors to provide funds to build its aircraft sector, and it would like to keep inflation low. Is it capable of doing that?

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If it is using a floating exchange rate, would be very difficult to maintain the exchange rate as specified but on the other hand, wouldn't be very difficult if it useother forms of exchange rate such as fixed exchange rate , then it would be possible but it could trigger a lot of problems especially with the confidence in the Japanese currency. However the monetary policy can take proper steps in keeping the inflation low but the exchange rate depends on both the United States dollar as well as the Japanese yen so that the entire power to maintain the exchange rate is not under control of Japan

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