Inflation vs depreciation

Bellumvir
Wed, 14 May 2008 22:58:00 +0000

Inflation means the monetary supply is being increased. Increasing the money supply decreasing interest rates. As interest rates are decreased, it is more advantageous to invest your money in countries with higher interest rates. Thus the money is moved to these other countries and the currency depreciates.

Once again, Inflation hints at a lower rates, leading to overseas investment and depreciation.

The GDP increase has nothing to with this because is it is only increasing Nominal and not in terms of Real Variables.