Abstract: Knowledge of the extent to which monies of different countries can substitute for each other is important for the design and implementation of monetary policy. However, existing empirical analyses of money demand in open economies rest on official estimates of money holdings that imply an infinite elasticity of substitution among different monetary assets. Existing analyses of Divisia monetary aggregates do not impose such an assumption, but do not allow foreign exchange considerations. This paper combines both approaches into a unified explanation of domestic money holdings. The empirical analysis suggests that U.S. Divisia money holdings are influenced by foreign exchange considerations. Foreign monetary policies, through their effects on both foreign interest and exchange rates, might influence domestic monetary policy directly via currency substitution.