supply side in market for foreign exchange

participants on the supply side operate for similar reasons (reflecting credit items in the balance of payments).foreign currency supply to the home country results firstly from foreigners purchasing home exports of goods and services or making unilateral transfers or in vestment income payments to the home country . for example ,U.s. exports of wheat and soybeans are a source of supply of foreign exchange . A second source arises from foreign investment in the home country . Foreign purchases of U.S. government bonds , European purchases of U.S. stocks and placement of bank deposits in the united states , and Japanese joint venture in U.S. automobile or electronic plants are all example of financial activity that provide a supply of foreign exchange to the united states . finally , foreign speculation and hedging activities can provide yet a third source of supply . the total supply of foreign exchange in any time period consists of these three source