I've seen both arguments. From my understanding an increase in the rate of inflation should decrease the value of the currency since it's by definition a depreciation in its purchasing power. But I've heard people argue that an increase in inflation actually increases the value of a currency since that country's Central Bank is expected to hike its rates which makes that country's financial assets more attractive and thus increases that country's currency value through an increase in the demand for that currency.
Which of these two views make more sense theoretically and which is more supported empirically?