FROM 1980 to early 1985 the dollar appreciated 60 percent in real terms. Since then it has depreciated about 20 percent. These exchange rate movements have made many observers wonder whether more is at work than mere changes in fundamentals, and if so, whether such large and persistent swings should be arrested by a return to the gold standard, by rigidly fixed exchange rates among the major monetary areas, or at least by target zones, either hard zones with bumpers or soft zones, implicit and discretionary. Discussion of these possibilities involves two sets of issues, views on which can be combined in a variety of ways. The issues are whether large exchange rate movements primarily reflect extravagant macroeconomic policies or poorly working markets and whether exchange rate fluctuations can be contained without the need for subordinating macroeconomic policies to the exchange rate objective.