Any individual who has a currency of any other country and wants to exchange that one for U.S. dollars. Then it can be considered that there is a demand for U.S. dollars or there is a supply of this currency against the currency of other. Again when the scenario is just the opposite, i.e., an individual who is having a specified amount of U.S. dollars and is willing for exchanging it for the currency of some different country, then it can be explained as supplying U.S. dollars with a demand for the currency of some different country.

Therefore the reasons that drive the need for the U.S dollars affects the supply of the currency of other countries. Nevertheless to mention that the provision of currencies of Japan, China, and others can also alter the factor for the supply of the dollars of U.S.

The summary of the entire thing is that it is just a balance between the supply and demand of the U.S. dollars to other countries in foreign exchange market.


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