Question

Through the summer and fall of 2008, as the global financial crisis began to take hold, international financial institutions and sovereign wealth funds significantly increased their purchases of U.S. Treasury securities as a safe haven investment. How should this have affected U.S. dollar exchange rates?

Short answer

As a result of the expansion sought after for U.S. dollar-named resources, the dollar should see its value appreciate in contrast to other exchange rates.

Step-by-step solution

Concept Introduction 

Between mid-2007 and mid-2009, the global financial crisis (GFC) referred to a period of high stress in world economic business sectors and banking frameworks.

Explanation

As a result of the expansion sought after for U.S. dollar-named resources, the dollar should see its value rise in contrast to other currencies. Because U.S. Treasury securities are priced in dollars, there will be a demand for USD in comparison to other currencies. The dollar exchange rates will appreciate as a result of this.

Final Answer 

As a result of the expansion sought after for U.S. dollar-named resources, the dollar should see its value appreciate in contrast to other exchange rates.