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

Think Like An Economist

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How Exchange Rates Affect the Demand for Dollars

Expected changes in exchange rate really matter because they also affect the demand for dollars. I'm interested in how these exchange rate movements impact someone like owen who's based an ireland, where they use the ura but he exports his gin to the us. When the dollar is weak, as then we get more dollars for our uros, we try and actually move money into the states. And that's to fund expansion into fund marketing and things like that. But when the dollar is strong against the uro,. we try and move money back. This is because when you can buy a lot of dollars with your uros, it's going to make it cheaper for him to invest

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