Factors Influencing Foreign Exchange Demand

Anything (apart from the exchange rate itself) affecting the demand for foreign exchange will shift

the demand curve—to the right for an increase in demand, to the left for a decrease.

This might result from: Changes in the demand for U.S.-produced goods and services

relative to foreign produced goods and services Changes in the desire to invest in the

U.S. relative to foreign countries Changes in the expectations of currency traders

about the likely future value of $US relative to foreign currencies The supply of $US

for yen is the same as the demand for yen with $US, so the same factors that change demand

also change supply.