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How has this trade war made the US dollar stronger?

n't have a strong understanding of macroeconomics. When compared to most major currencies, the US dollar has soared over the past few months. I assume that this is because of Trump's potential trade wars. Is that correct? I notice that the USD actually took off on basically the exact same day (April 20th or April 21st) when compared to almost any currency which confuses me - didn't trade tensions start to get heated back in March? Thanks.

Forex | 👁 924 | Posted 2018-11-03 | Share on Facebook | Twitter | Google+

| Modified: 2018-11-03 | Author:

6 Comments

workntwerk 2 years ago

High interest rates and expectations In the US? Isn't the prime rate at like 2% now?

kanyeright 2 years ago

I dont think its because of the trade war itself but it has devalued the yuan

Polus43 2 years ago

Along with all of this, we are a net importer and there are advantages to that. Tariffs effectively reduce demand by increasing prices. In open economy macroeconomics, this means there less demand overall. However, exporting countries have demand for there currencies importing countries demand others' currencies. If prices rise because of tariffs, in theory, demand should fall for exporting countries, appreciating the importing country's relative to the exporting country. What other's have said is likely true: Safe Haven in the USA effect High interest rates and expectations Overall economic health of the USA relative to others (Youth unemployment in Greece finally decreased to 42.30%) EDIT: In summary, we're destined to "win" the trade war, in that the negative effects likely will effect the USA the least and thus relatively speaking, we're the best off. Similar to how those without money benefit from high inflation because they don't have any money that depreciates. They 'win', but let's face it, we all lose in the long run.

rah311 2 years ago

Combination of perfect factors, positioning, rates going up, risk off and general risk aversion. Dollar should sell off next few weeks

offjerk 2 years ago

USA has highest rates of developed countries and is showing signs that rates will continue to rise. Capital flows. I dont think trade war has had a material impact but I could be wrong. China is without a doubt devaluing their currency tho. USA also has the privilege of exporting its inflation to developing countries dependent on Mercian financial markets.

TrannyPornO 2 years ago

That's the expected impact of tariffs. https://krugman.blogs.nytimes.com/2016/12/27/tariffs-and-the-trade-balance-wonkish/


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