In accordance with the PPP concept,the inflation differentials between countries affect the exchange rate,and consequently the PPP could be good value in order to forecast the exchange rate. In Cochran & Defina study (Cochran & Defina 1995),they show that the exchange rates,although they deviate from the PPP,they finally return to their PPP levels. However,during their deviation the possibility of the exchange rates moving backward from or forwards to the PPP remains the same,and consequentiy the PPP did not prove itself to be a consistent or reliable 'tool' for forecasting