In foreign exchange markets,how is the supply of dollars determined?

Question

Quizplus · Accepted Answer

The supply of dollars in foreign exchange markets is determined by the level of Canadian imports and the demand for foreign assets by Canadian citizens and the Canadian government. This is because when Canadians import goods and services from other countries, they need to pay for them in the currency of the exporting country (usually U.S. dollars). Similarly, when Canadian citizens or the Canadian government invest in foreign assets such as stocks, bonds, or real estate, they need to convert Canadian dollars into the currency of the country where the asset is located. This creates a supply of Canadian dollars in the foreign exchange market and a demand for foreign currencies, such as the U.S. dollar.

In Foreign Exchange Markets,how Is the Supply of Dollars Determined