Higher US interest rates attract foreign capital â†' dollar:

If higher US interest rates were to cause the dollar to depreciate, it would imply that investors are withdrawing their capital or that the dollar is becoming less attractive. However, the opposite occurs; elevated rates incentivize foreign investments, thereby increasing demand for the dollar and leading to appreciation, not depreciation.

A scenario where interest rates rise but the dollar remains unchanged contradicts economic principles. Higher interest rates typically signal a more attractive investment climate, fostering increased demand for the dollar as investors seek higher returns. This dynamic generally leads to appreciation rather than stagnation.

The term "fixed" refers to a currency that maintains a constant value relative to another currency or a basket of currencies, typically through government intervention. However, in a floating exchange rate system, which the dollar operates under, changes in interest rates can lead to fluctuations in value. Therefore, claiming the dollar is fixed does not accurately reflect the dynamics of interest rate changes.