Question

Given certain international transactions, determine if they cause a supply/demand of the U.S. dollar as well as a depreciation/appreciation of the U.S. dollar? "at least 1 paragraph required"

This is all that was given is just wants really an opinion on it

Answer 1

Of Course certain international transaction do cause demand and supply mismatch of the US dollar because of which the rates increase and decrease. Lets take example of countries dependent on Oil as imports and if the oil rates increase from $50 a barrel to $72 a barrel. The countries dependent on oil as imports will require more dollars to purchase it. As the demand for dollars increase by these countries there will be a price shift of US dollars and it will move up because the demand for it rises.

The same demand and supply causes the appreciation and the depreciation of the value of the currency in floating exchange rate system. Lets continue the above example where the oil rates increase, which causes the dollar rates to increase this will appreciate its value against the country's local currency which will be exchanged for dollars. If the foreign currency (in this case US Dollars) appreciates then it is capable to buy more units if local currency and if it depreciates then it will be capable to buy less of local currency.  

Appreciation/depreciation of currencies happen due to inflation in both the countries, import-export balances, investments in the country and GDP growth etc.