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S E33: Exchange Rates & International Finance - The flow of currencies around the world

Think Like An Economist

CHAPTER

Is There a Real Benefit to American Investors?

There's a lot of money flowing around in this avesade. Realize that if you're just thinking about the foreign exchange market, it can be complicated. The only reason were for buying or selling foreign currencies is to do some real business in that other country. So think about the real reasons we're doing business with foreigners. Usually it's to buy goods from abroad, or it's to sell goods to foreigners. Sometimes it's also about investments. That's what drives the demand and supply of currency.

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