In the foreign exchange market, people and firms exchange one currency to purchase another currency. On the supply side of the foreign exchange market for the trading of U.S.

The demand for dollars comes from those U.S. Export firms seeking to convert their earnings in foreign currency back into U.S.

international capital flows — flow of financial capital across national boundaries either as portfolio investment or direct investment. foreign exchange market — the market in which people use one currency to buy another currency. portfolio investment — an investment in another country that is purely financial and does not involve any management responsibility. appreciating — when a currency is worth more in terms of other currencies; also called “strengthening”.