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What is the impact of inflation on exchange rates?
  • a)
    Inflation leads to depreciation of the currency
  • b)
    Inflation leads to appreciation of the currency
  • c)
    Inflation has no impact on exchange rates
  • d)
    Inflation only affects foreign exchange rates
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
What is the impact of inflation on exchange rates?a)Inflation leads to...
Inflation usually leads to the depreciation of a country's currency. When prices rise, the value of the currency decreases relative to other currencies, making exports cheaper and imports more expensive.
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What is the impact of inflation on exchange rates?a)Inflation leads to depreciation of the currencyb)Inflation leads to appreciation of the currencyc)Inflation has no impact on exchange ratesd)Inflation only affects foreign exchange ratesCorrect answer is option 'A'. Can you explain this answer?
Question Description
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