No influence: In a closed economy or a strictly controlled economy, inflation has no influence on the foreign exchange rate. For example, China has an obvious inflation problem now, but because China controls the exchange rate, the foreign exchange market is not affected by the domestic situation of the local currency. China's foreign exchange level is completely controlled by the state through market transactions.

Currency devaluation (exchange rate decline): this is introduced by many economists. In a fully open economy, inflation means that the local currency depreciates, and the exchange rate will naturally fall. Many small and medium-sized open economies have this problem. Once the domestic inflation is serious, the foreign exchange rate will also decrease.

Currency appreciation (exchange rate appreciation): This is a rather strange situation. But it did happen between 2000 and 20 12, and it happened in the world's largest and most important currency-the US dollar. Although the United States is an open market economy, because the US dollar is also the main currency in circulation in the world, a large number of commodities and financial products are denominated in US dollars. Therefore, when the Fed oversubscribes the currency, the liquidity of the dollar increases, thus the value of the dollar increases, but the currency will appreciate. Of course, this abnormal situation disappeared in the late financial crisis and after QE3 in the United States. One theory holds that the depreciation effect brought by the excess of dollars eventually exceeds the effect of the enhanced liquidity of dollars. Therefore, after 20 12, every QE in the United States will cause the dollar to depreciate.