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U.S. consumer spending reached record highs in September coming out from the covid-19 slump. It is...

U.S. consumer spending reached record highs in September coming out from the covid-19 slump. It is expected that 15% of incomes is spent on imported goods and services. How could this affect exchange rate of the U.S. dollar against our major trading partners?

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Increase in import of services and consumption goods will lead to increase in demand for currency of our trading partner because we will need the currency of our trading partners to buy their goods and services. And at the same time we are increasing the supply of US dollars because we have to sell dollars to buy the currency of our trading partners. So as a result of increase in supply of dollars and increase in demand for our trading partner's currency , the value of dollar will decline i.e dollar will depreciate against the currency of our trading partner. In other words, now one dollar will be able to buy less amount of currency trading partner.Hence the exchange rate of US dollars will decline against the currency of its trading partner.

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