Exchange rate pass through refers to the tarnsmission of exchange rate changes into import prices in the destination market currency price of goods. Exporters can pass on the entire change in the exchanghe rate to the importing nation or absorb sorm of the changes by adjusting mark-up so as not to affect market shares in the destination marketh. The extent to which they pass-through the exchange rate change depends on market shares in the importing nation which in turn depnds on the extent of competition in the market.