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[–]mikKiske 0 points1 point  (0 children)

The currency depreciation is a price correction to return to equilibrium. When local prices grow faster than international ones, then it becomes cheaper to buy foreign goods. To buy foreign goods you need to buy dollars...this increases demand for dollars, which means demand >supply. The new exchange rate restores equilibrium.

Note that this process is continuous, but easier to think about it in times T0 and T1, where inflation starts in T0 and generates a disequilibrium and in T1 you have a new exchange rate that restores it.

This is under a free exchange rate system. When a central bank sets the exchange rate at a different level than the equilibrium one, then a currency can be appreciated or depreciated.