Effect of interest rate and inflation changes

PAR 1 - Effect of increase in interest rates The exchange rate rises - the inflow of foreign funds raises demand for the domestic currency and so pushes up the exchange rate. This has the benefit of lowering import prices and thereby bearing down on domestic inflation. However, it makes exports more expensive and possibly harder to sell. The long-term effect on the balance of payments could be beneficial or harmful depending on the elasticity of the demand and supply for traded goods. PAR 2 - Effect of increased inflation above 5% Weakens country's competitive position - if inflation in a country exceeds that in a competitor country, then it makes exports less attractive (assuming unchanged exchange rates) and imports more competitive. This could mean fewer sales of that country's goods at home and abroad and thus a bigger trade deficit. For example the decline of Britain's manufacturing industry can be partly attributed to the growth of cheap imports when they were experiencing high inflation in the period 1978-1983. Question: In both paragraphs the import prices reduce. I am trying to differentiate between the two paragraphs. Why doesn't the reduced import prices in par 2 also bear down on inflation.