Hi guys,
I'm sure there are multiple answers to my question, but I was hoping someone could offer some input on the following:
If interest rates rise ( for whatever reason...investment sentiment away from bonds towards equities, rise in inflation, expected monetary policy towards raising interest rates, etc...), could lead to foreign investment pouring into the US, resulting in the US dollar appreciating. ( I think)
Sort of what is happening right now ( I believe)...Could anyone explain what is physically driving the dollar upwards?
Are foreign institutional investors literally buying the US dollar - the actual currency, or are they buying US securities that they must purchase using US dollars, or is it something else? Foreign central banks doing something? ( again what literally would the transaction be)?
Thank you guys in advance.