Explain why a high currency substitution would cause the U.S. dollar exchange rate to depreciate more than the expected level when the Fed increases money supply in the U.S. Assume that a country...

Explain why a high currency substitution would cause the U.S. dollar exchange rate to depreciate more than the expected level when the Fed increases money supply in the U.S.

Assume that a country increases its domestic money supply. If the “overshooting” theory is correct, how could a central bank prevent the exchange rate from depreciating too much in the short run?