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Exchange Rates and Inflation

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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.

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