Exchange rate dynamics of the dollar

The analysis of exchange rate decision and its dynamic adjustment are the core of exchange rate theory. In this paper, based on the exchange rate overshooting model, we highlight the mechanism of financial economy and real economy and their two-wheeled driven manner operation, which is associated with the aggregate supply and aggregate demand of macroeconomic. With the help of nonlinear macro-finance theory, we introduce tradable financial assets into the money supply and demand analysis, and try to make a new analytical framework. From the angle of financial economy and real economy, we analyze the dynamic changes in the nominal exchange rate U.S. dollar, and use it as a basis for empirical research, examining the U.S. dollar exchange rate and economic misalignment.