Respective inflation rates in two countries is not a determining factor of exchange rates between them. True or False?

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Tamer Elbeshbishy
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Financial Management

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Date Posted: 2014/09/01

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by Kamran Anjum , Head of Internal Audit , Rafhan Maize Products Company limited, Faisalabad, Pakistan, Ingredion Incorporated Gmbh

False. As per purchasing power parity theory exchage rate have to be adjusted for the respective inflation rates in two countries.

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