Harvard Business School Dollar Exchange Rate Worksheet

User Generated



Harvard Business School

Question Description

I'm working on a macro economics question and need a sample draft to help me learn.

[Related to the Apply the Concept: "What Explains Movements in the Dollar Exchange Rate?"]

In March 2020, as the Covid-19 pandemic began to have a significant effect on the global economy, an article in the Wall Street Journal discussed what was happening with the British pound. The article stated that: "The pound is being caught up more generally in a flight to dollars that is affecting all of the globe's major currencies."

What does the article mean by a "flight to dollars", and how is it occurring?

Foreign governments become concerned about the stability of their currency and decide to buy dollars in the foreign exchange market to back the domestic currency.

Foreign investors are attracted to the stability of the U.S. dollar and decide to invest in dollar denominated assets such as U.S. Treasury bonds.

Foreign investors are attracted to the stability of the U.S. dollar and decide to buy U.S. dollars in the foreign exchange market.

Foreign investors no longer see the dollar as a stable currency and attempt to sell off their dollar denominated assets.

Explanation & Answer:
1 Page
Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Explanation & Answer

View attached explanation and answer. Let me know if y...

CebsYvyvna (5522)
Rice University

Very useful material for studying!


Related Tags