Can You Explain The Relation Between Inflation Rates And Exchange Rate.?

Inflation rate
In economics, the inflation rate is a measure of inflation, the rate of increase of a price index (for example, a consumer price index).It is the percentage rate of change in price level over time. [1] The rate of decrease in the purchasing power of money is approximately equal.


If P0 is the current average price level and P − 1 is the price level a year ago, the rate of inflation during the year might be measured as follows:

        Text{inflation rate} = frac{P_0 - P_{-1}}{P_{-1}} times 100%


Exchange rate
between two currencies specifies how much one currency is worth in terms of the other. It is the value of a foreign nation’s currency in terms of the home nation’s currency

If the inflation rate increase the demand of the exchange rate is decrease. Its the inverse relationship.

I have read already answers and would like to add with out commenting on those

lets have an example; if due to inflation price of potatoes increases in country A because inflation causes the erosion in the purchasing power of the money the currency A. It would be difficult to make exports the potatoes to country B as the result of inflation. Now the exports of country A are decreased by the amount = quantity of potatoes that would have been exported during last years x price

due to this the net demand for the currency A decreases over the past that would cause the trade deficit and as a result the country A has to lower its imports or they will reduce the exchange rate to attract more foreign exchange.