In this insightful discussion, Charles Engel, the Donald Hester Professor of Economics at the University of Wisconsin, delves into currency models and exchange rate dynamics. He explores how the US dollar serves as a paradoxical safe-haven currency, even amid heavy debts. Engel critiques traditional forecasting methods and highlights modern approaches that consider financial variables and real interest rates. His thoughts on carry trades and the implications of central bank policies offer a valuable perspective on international monetary dynamics.