Impact of Inflation on Exchange Rates

The value of a currency relative to another currency is fundamental to international trade and investment. Exchange rates can fluctuate due to various factors including interest rates, inflation, and economic stability. Understanding how exchange rates are determined is critical for investors and businesses involved in cross-border transactions.

Assume that the economy of Country A has experienced a period of sustained inflation, while the economy of Country B has maintained stable prices. Given this scenario, how would the exchange rate between Country A's currency and Country B's currency likely be affected over time?