Foreign currency demand answers generally to the actual situation of each currency. If one foreign currency is in a good situation, where it is marketed, it will increase the demand more than any other.
What makes foreing currency demand increase? In Latinamerica, more exactly in Argentina the actual exchange rate is 3,20 of argentine peso, per each american dollar. This devaluation of argentine peso makes buyer have uncertainty and that’s why the biggest demand of foreign currency in uncertainty times is for the dollar. This situation means that the argentine peso suffers the inflation that there is in Argentina, instead dollar can continue raising or keeping actual levels.
The political-economical situation makes people search a strong currency, and so a bigger demand on this currency. The foreign currency demand has to be understand as a thermometer that shows the economy rhythm. It is not by chance that people try to be out of risk buying american dollars or Euro, the strongest and safest foreign currencies of the world.
During the worst crisis of latinoamerican countries happened that in front of the uncertainty that brought many political decisions, popolation started to buy a stronger currency to support them in difficult times. But pay attention, foreign currency demand should also be regulated because on the contrary it can provoke effects opposite to those searched.