The price of forex futures rose above $1 000 by the end of the day after the US President Donald Trump’s executive order barring imports from China and Mexico.
Forex is often used to buy foreign currencies such as the US dollar.
“It is possible that we are witnessing a surge in forex markets,” said Patrick O’Connor, an associate professor at the University of Melbourne’s School of Economics and Finance.
ForeX futures market The price is up by around $1.70 to $1 001.25 in the last 24 hours, according to CoinDesk.
The dollar has lost about 1.6 per cent against a basket of major currencies.
Forexes rise was fuelled by the lifting of the tariffs imposed by China on imports of US agricultural goods, which were lifted on Monday.
Mr Trump has threatened to impose a “huge tax” on Chinese goods.
A number of traders, including hedge fund managers, hedge fund firms and traders on the New York Stock Exchange (NYSE), were also on the rise after the ban.
“The market is very volatile and traders are jumping up and down,” said Mr O’Connor.
“I think that there is a potential for the forex market to see some volatility in the next few days.”
The rally was sparked by the move by Chinese officials to tighten border controls, and by the announcement by China’s central bank that it would be restricting foreign exchange reserves to a maximum of 2 per cent of GDP.
The move comes after the Chinese central bank lowered its target for foreign exchange reserve holdings to 4 per cent from 5 per cent in August.
The central bank has said it will hold back $US2 trillion in reserves until 2020.