On the foreign exchange market, who demands dollarsU.S. investors or foreign investors? Why does an increase in

Question:

On the foreign exchange market, who demands dollars—U.S. investors or foreign investors? Why does an increase in U.S. interest rates relative to Japanese interest rates increase the demand for dollars? An investor who holds U.S. currency doesn’t receive any interest, so why does the demand for dollars rise when U.S. interest rates rise?