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As currency depreciates, inflation rate increases. In other words, with an increase in percentage change in nominal interest rate, inflation differential also tends to increase.
Theory suggests that there is a possitive correlation between nominal exchange rate and inflation.
After applying the theory on actual data, the results affirm that currency depreciation causes increase in inflation and vise versa.

YearInflation_Rate_PAKInflation_Rate_USANominal_Exchange_Rate
19606.947361.457974.76190
19611.640411.070724.76190
1962-0.516461.198774.76190
19631.456481.239664.76190
19644.179581.278914.76190
19655.568631.585164.76190
19667.227623.015074.76190
19676.811392.772784.76190
19680.170624.271794.76190
19693.186985.462384.76190
19705.349845.838254.76190
19714.730694.292764.76190
19725.183233.272278.68138
197323.070086.177769.99424
197426.6630311.054809.90000
197520.904509.143149.90000
19767.158325.744819.90000
197710.132966.501689.90000
19786.138697.630969.90000
19798.2670411.254479.90000
198011.9382313.549209.90000
198111.8799110.334719.90000
19825.903526.1314211.84746
19836.362033.2124313.11697
19846.087164.3005314.04633
19855.614833.5456415.92839
19863.506411.8980416.64750
19874.681213.6645617.39880
19888.837934.0777418.00329
19897.844264.8270020.54149
19909.052135.3979521.70737
199111.791274.2349623.80076
19929.509043.0288125.08279
19939.973662.9516528.10718
199412.368192.6074430.56659
199512.343572.8054131.64268
199610.373802.9312036.07868
199711.375492.3376841.11152
19986.228001.5522745.04666
19994.142632.1880249.50069
20004.366663.3768553.64818
20013.148262.8261761.92716
20023.290341.5860359.72378
20032.914132.2700957.75199
20047.444622.6772358.25786
20059.063323.3927459.51447
20067.921083.2259460.27133
20077.598682.8526760.73851
200820.286123.8391070.40803
200913.64776-0.3555481.71289
201013.881131.6400485.19381
201111.916763.1568486.34338
20129.685052.0693393.39519
20137.689501.46483101.62889
20147.191671.62222101.10008
20152.539510.11862102.76927
20163.752591.26158104.76911
20174.085372.13011105.45516
2018 2.44258 
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