Is the Strong Dollar a Product of International Currency Markets?

Ate. O kso if the strong dollar is a product of international currency markets, i'm just curious if they're subject to basic laws of supply and demand that we're all used to. Or do just currency markets work in a completely fundamentally different way? This is a really fundamental question at it's surprisingly hard to answer in a way that isn't extraordinarily technical. The vast majority of foreign exchange transactions are not driven by financial trade but by hedging against risks on their balance sheets. In fact there's a very famous economic paper from the early 19 nineties which says any kind of model for predicting foreign exchange rates is going to go as far astray as possible.