U.S. Dollar Reaches Low Against Yen Traders continued to make bets in favour of the yen, sending the U.S. dollar to a record low against the Japanese currency. Source: The Wall Street Journal ,...

U.S. Dollar Reaches Low Against Yen

Traders continued to make bets in favour of

the yen, sending the U.S. dollar to a record low

against the Japanese currency.

Source: The Wall Street Journal ,

August 20, 2011

a. How do “bets in favour of the yen” influence

the exchange rate?

b. How does the U.S. Federal Reserve’s monetary policy influence the exchange rate?