The problem with modifying supply based on an exchange rate is:
Which exchange rate to use? For example, when Bitcoin was created, there were no exchanges around.
It would introduce a lot of uncertainty in the design.
People could just use whatever exchange rate they wanted by putting a url to a service that provided an exchange rate into their client. Then the network would have to agree by majority rule or something.
I think there are bigger challenges to my suggestion than this.
You do realize that means, at least theoretically, complete user discretion over inflation?
It may even work, but it does feel kind of fragile.