This chapter sets forth a theoretical framework for the analysis of the politics of exchange rates. It relies on three factors—international exposure, tradability, and pass-through—to explain as much of currency policy preferences as possible. This can provide building blocks for a broader analysis of the politics of exchange rates. The chapter begins with a statement of the dependent variables of the study. It then presents the author's reasoning and the empirical expectations that flow from it. This is followed by a brief summary of other scholarly studies of the economics and politics of exchange rates in order to situate this study within the broader literature.