Why did the dollar fall in value relative to other currencies in the first half of 2011?
A) Foreign investors increased their investment in U.S. financial assets, and this raises the demand for dollars.
B) Foreign investors have reduced the level of investment in U.S. financial assets, decreasing the demand for dollars.
C) Foreign investors no longer want to hold dollars and this raises the demand for dollars.
D) The negative trade balance due to the current account deficit reduces the supply of dollars.

Question

Quizplus · Accepted Answer

A reduction in the level of investment in U.S. financial assets by foreign investors decreases the demand for dollars, leading to a fall in its value relative to other currencies.

Why Did the Dollar Fall in Value Relative to Other