Offsetting this could be changes in global demand and currency fluctuations.
To maintain its currency peg, the People's Bank of China has to create enough yuan to satisfy foreign demand for the currency at the going rate of 8.3 yuan to the dollar.
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This brings the United States great benefits, as it guarantees sustained demand for its currency.
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Global investors will likely remain underweight in the yen for a long time, and fresh demand for the currency will continue to drop.
What that ultimately means, in theory, is that less demand for a currency means higher interest rates in the future in order to attract people to it.
One explanation for the abrupt change of mood is that weaker demand in the currency zone's main foreign markets have at last started to hurt the economy.
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The increase in the demand for paper currency and gold not only had a quantity effect on the money supply but it also put upward pressure on the price of gold, which meant that dollar prices of all goods and services had to fall for the relative price of gold to rise.
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But the more money flowing in, the more that demand impacts the local currency.
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Initial high-frequency data for September, though, point at a recovery in EM central bank demand for the common currency.
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China must foster private-sector domestic demand with a stronger currency, among other things.
However, an international currency would demand far bigger changes.
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As more people use the currency, demand for Bitcoins will grow beyond the finite supply and force up the value of each one, which will force the prices of goods to fall over time.
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Many of those confessions involved concerns about demand in Europe and related currency factors.
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Of course, they still need some reserves, to smooth out temporary gaps in the demand and supply of foreign currency.
If the dollar had not been a reserve currency in high demand by foreigners, we would have had to correct that foreign imbalance long ago.
The U.S. dollar index is sharply higher Thursday and hit a fresh five-week high overnight, on perceived safe-haven demand and as the Euro currency sinks on the bad economic data issued for the EU Thursday.
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The Federal Reserve , via the largely passive issuance of currency: the issuance of Federal Reserve notes, created when the public chooses to redeem their on-demand bank-issued deposit liabilities for currency.
Indeed, as both America and, ironically, Germany found in the 1980s and 1990s, big budget deficits, if allied to tight monetary policy, often strengthen rather than weaken a currency by increasing foreign demand for it.
Building on the decisions and commitments made at the G20 last weekend, where China agreed that it was determined to have greater flexibility in exchange rates and agreed to stimulate more domestic demand, the President raised those issues as critical to dealing with the current economic issues, pressed on both the currency issue and on rebalancing and domestic demand.
Or, possibly, they will demand to get paid in the alternative currency.
Freely determined market prices and a monetary system that allows the supply of money to meet demand through market processes and a convertible currency ensure long-run prosperity.
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As the U.S. expands the monetary base it pushes down the value of the dollar, and in so doing sparks demand and price fluctuations in commodity and currency values.
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As for the dollar, the reason to worry would be if a falling currency prompted foreign investors to demand higher yields on American Treasury bonds to compensate them for the risk.
There has been some perceived safe-haven demand for the greenback as the Euro currency has sunk on the bad economic data issued for the EU late this week, and on the worries about a currency war.
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When you create these wedges, you actually create demand that brings more money into the local currency.
And by reducing the currency-risk premium that investors demand for holding kiwi dollars, it would lower real interest rates.
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The Fed is fundamentally confusing price changes that result from supply and demand with those that result from debasing the currency.
Bankers continue to demand a package from abroad to steady the currency.
The country's central bank could have kept the real steady against the dollar by buying up the currency so that supply would match demand.
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