Exchange Rates and Inflation
When the dollar depreciates in the foreign exchange market, Americans must pay more for foreign goods. Although the price effects of exchange-rate changes can ripple through standard price indexes, under no circumstances can a dollar depreciation cuse inflation.
Suggested citation: “Exchange Rates and Inflation,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-11, pp. 11, 11.01.1996.