Macro: Unit 5.2 -- The Foreign Exchange Market

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Say the current exchange rate for Japan and the US is 100yen for 1 dollar. Then Japan suddenly developed the production of robots. The local Japanese buy it for 100yen, but the Americans also want to buy it. The Japanese said, "No. If you want to buy our robots it will cost you 10 dollars each. And still, the Americans want to buy it.

It will appreciate the Yen against the dollar, and yet increase the demand for the yen currency, breaking that downward spire yo are talking about.

Thanks very much. It is easy to understand from what you explain about the exchange rate with those charts.

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