Hello Everyone, I’m starting to approach the forex world because I’m doing a thesis in FX derivatives.
I was reading in an that in august 2018 Trump posted a where he announced that he would have raised tariffs on alluminium and steel against Turkey.
After that announcement USD/TRY jumped to 65% infraday.
My question is: why this happens?
I have no experience in FX but I will try to say my opinion about this:
Is it because maybe the fact that tariffs are raised caused in the investors the thought that “in the next future” USA will receives more incomes in dollars?
(let’s say I’m XYZ turkish company, if before I had to pay 10% tariffs and now 50% tariffs, I had to pay more dollars to export in USA. So I need more dollars to pay USA these higher tariffs. If I need more dollars the demand of dollars will increase and so the price of USD will raise).
Is this interpretation correct? Can anyone more expert than me give me an opinion about this?
Thank You!
PS: I’m sorry but the system doesn’t allow me to add links to my topic. Anyway the articles can be found in google searching: “currency derivatives house of year” and the site name is risk.n-e-t