According to the theory of purchasing power parity,exchange rates will adjust to offset differences in:

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The theory of purchasing power parity suggests that exchange rates will adjust to offset differences in expected inflation rates across countries. This means that if a country is expected to have higher inflation in the future compared to another country, its currency will depreciate to offset the difference in purchasing power. In this way, goods and services should cost roughly the same in different countries after accounting for exchange rates. Differences in interest rates, forward rates, and international Fisher rates may also affect exchange rates, but PPP specifically focuses on inflation differentials.

According to the Theory of Purchasing Power Parity,exchange Rates Will