In US, if the interest rate increase and it will affect the demand product from firms on another country,

this issue because of the currency exchange where will affect the price of offer and the demand quantity. It works with the same way that on supply and demand for products shifts to change the prices of those products, the constant shifts in the supply and demand for foreign currency result in changing prices of currency which brings the result of the value of the money changes as demand for foreign currencies changes. The value of the US dollar will cost to purchase of foreign currency and exchange.

The reason why the increase demands for a foreign currency been effect on other nations product is because when the products sell at a lower price than domestic products, consumer will increase their demand on imports. On the other hand, if the inflation rate is getting higher on domestic product compare to other nations, the demand for imports will rise. This increase in demand pushes the price of the currency higher, so their currency appreciates.

As the reason consumer using the US dollar to buy the foreign currency, so it will effect when the demand for foreign currency increase, the international supply of USD will be increase proportionately, as the supply of dollars increase, the value of USD falls, causing the dollar to depreciate.

As in conclusion, as supply and demand for currencies change, the values of those currencies change. When the U.S. dollar is strong, imports seem less expensive, leading to increased demand for imported products and the currency needed to purchase them. At the same time, a stronger dollar decreases exports, because they appear more expensive to foreign consumers. Therefore, a trade deficit develops as the result of a strong dollar. The opposite effects result from a weak U.S. dollar. While importers prefer a strong dollar, exporters prefer a weak dollar.

When the price of the product is rise, there will be feel reaction from consumer towards the products will be in 5 ways which is Elastic Demand, Inelastic demand, Unitary Demand, Perfectly Elastic demand and perfectly inelastic demand. Elastic demand is happen where a change in price result to a greater change in quantity demanded, this shows that the buyers are very sensitive towards the price change of the product itself and easily encouraged to buy the same product if the price of the product decrease. This entire product can be counted as luxurious product and people will depend on the price of the product. Inelastic demand is a change in price which is lesser change in quantity demanded, this product normally is a daily lifestyle product and is a must product for the consumer, and People have to buy said products even if there is a big increase in their prices. However, a big decrease in the prices of the aforementioned goods has a very little increase in quantity demanded. For example, a great decline in the prices of rice and medicine does not encourage people to eat more rice or take more medicine. They only buy as much as the requirement of their normal consumption. Unitary Demand is where the price change result is almost equal change in quantity demanded as goods and services under this category are considered semi-luxury or semi-essential goods. In perfectly elastic demand, is where there is no change in price but got a huge or infinite change in quantity demanded. While for perfectly inelastic demand, is where there is a infinite changes on the price of the product and this involve of the extreme situation which involves life or death to an individual.

As the view of the reaction on investors for the foreign currency is where biggest challenge is on the currency fluctuations. This may brings the big effect of the risk arising on it and gain on an investment nin foreign may cancel due to the currency fluctuation. An investor might experience a windfall gain if the currency of the foreign country strengthens. Investors in foreign securities or other assets must consider the likely exchange rate movement with the currency of the target country and weigh the currency risk together with the other risks of investing. Some investors look for gains through buying and selling foreign currency, hoping to profit from short-term currency fluctuations. The rate of exchange is the price at which one currency may be converted into another. Generally, where there is a floating exchange rate, there is constant movement of the exchange rates because of various economic factors. This movement affects the value of investments made in a foreign currency. Where there are floating exchange rates, the rate of exchange of a currency will be affected by the supply and demand. The price of the currency might rise if there is a demand for exports from the country, if the interest rate available on instruments denominated in that currency is relatively high or if there is an inflow of investment into the country. The exchange rates also fluctuate on a daily basis as a result of speculation in the currency, when people acquire foreign currency as an investment in the expectation that the exchange rate will rise. This currency speculation accounts for most of the volume of trading on the foreign exchange markets and causes the rates to rise or fall in the short term based on investor sentiment. In the longer term, the underlying economic factors are likely to be the main influence on the rate of exchange. The exchange rate speculator, on the other hand, is not concerned with eliminating risk but is taking on the currency exchange rate risk with the intention of making a profit from the transactions. The speculator is more concerned about predicting the short-term currency fluctuations arising from market sentiment on a daily basis rather than studying the economic fundamentals. Most daily trading on the foreign exchange market results from currency speculation, so the short term currency fluctuations are determined by market reactions to events rather than the underlying state of the economy of each country.