WHY INFLATION CAUSES DEVALATION

In basic terms, you must believe in intrinsic values. In order to maintain the so-called purchasing power, if you sell an apple for HK$3 today, and you want to maintain your livelihood, you put up the price to HK$3.5 tomorrow. To an overseas buyer, he did not pay extra for the same product. Therefore, in order to maintain the same quantity of export, you must lower your currency rate. This is only one possibility. The other side of the coin is that because your currency devaluate, therefore all import products goes up as a result of inflation being imported such as Hong Kong.