Session 13 — FX Determinants • True/False Quiz

1) If the Dollar Index (DXY) is above 100, the USD is stronger than its base period.

2) A country can perfectly have all three: a fixed exchange rate, free capital flows, and an independent monetary policy.

3) The U.S. President directly sets the federal funds rate—and therefore the USD—by decree.

4) The New York Fed executes FX operations as agent for the U.S. Treasury/Fed.

5) Higher U.S. interest rates relative to other countries tend to support the USD, all else equal.

6) A global “risk-on” mood typically boosts the USD because investors rush into safe havens.

7) “Tariffs always weaken the USD immediately.”

8) Large, persistent U.S. fiscal deficits can, over time, weigh on the USD if investor demand for Treasuries weakens.

9) A negative rare-earths supply shock (export controls/disruption) can trigger risk-off flows that support the USD in the short run.

10) A euro-area exporter invoicing in euros eliminates FX risk by accepting a USD stablecoin.

11) A euro importer paying a U.S. supplier might use a USD stablecoin for speed/liquidity, but that creates EUR/USD exposure unless hedged.

12) The Dollar Index (DXY) is heavily weighted to the euro; the EUR is roughly over half of the basket.

13) A euro exporter who fears EUR/USD falling can hedge by selling euros forward to lock today’s rate.

14) Presidential comments (e.g., “we want a weaker dollar”) by themselves deterministically set the USD path.

15) Stablecoins are projected to capture roughly 12% of cross-border payments by 2030.