History of Forex

History of Forex
Forex Market History

The following article sheds light on the historical evolution of the foreign exchange market. It follows the historical roots of the global currency trading since the days of barter gold during the Bretton Woods Agreement to its current status.

Swap the gold and the Bretton Woods Agreement.

The Convention on the Bretton Woods in 1944 a fixed rate for the currencies of countries against the dollar and set the value of the dollar rate of 35 dollars per ounce of gold. In 1967, a Chicago bank refused to grant a loan in pound sterling to a college Provcior the name of Milton Friedman, as it was intended to use the loan to reduce the price of the British currency. The reason for the bank's refusal to grant the loan in accordance with the Bretton Woods institutions.

Where the objective of this Convention to build a consistent global monetary policy by preventing the movement of money between the States and to identify speculation in international currencies. Before the Bretton Woods Agreement that gold is the standard Alossaci trading as had prevailed "in the period between 1876 to World War I through the global economic system. Under the trading system / swap gold witnessed an era of currency stability times where it has supported the gold price.

In any case that the system of standards for trading in gold has a weak point systems are extreme. With a strong economy, it will import large quantities, so exhausted reserves of gold required to support its currency. As a result of this resource will drop money and high interest rates and economic activity Itbatye even up to the point of apostasy. And inevitable price of goods will arrive to the bottom and will look attractive to other countries, which will jump to a race who will purchase injection the economy with gold until it increased its money resources, pushing interest rates downward and return wealth to the economy. Systems such as those prevailing during the period of extreme standards for gold trading until the First World War cut off temporarily stream of trade and free movement of gold.

It was founded at Bretton Woods after World War II to the creation of stability and regulating the Forex market, the global and States agreed on the joint to maintain the values of their currencies within a narrow margin against the dollar and the rate of gold will also be required. And thus won the status of the dollar as a reference currency top reflect the shift in control of the global economy from Europe to the United States. And a ban on countries to reduce the values of their currencies to benefit from foreign trade and allowed them to reduce the values of their currencies by less than 10% only. And the enormous volume of traffic trading the Forex market led to massive movements of capital, paid by the post-war construction during 1950 and led the movement to the instability of exchange rates of foreign currencies, which was established in the Bretton Woods Agreement.

Was announced in 1971 to abandon the Bretton Woods Agreement with respect to the U.S. dollar will not become a viable replacement for gold. By 1973, controlled the forces of supply and demand for currencies of major industrial countries, which now floats more freely across nations. Began in the seventies increased flotation price per day with volumes, speed and scalability of the price change and the emergence of new financial instruments and also started free-market regulations inhalers and trade liberalization.

With the launch of computers and technology in the eighties of the century has accelerated the momentum of the steps the markets for capital movements across the border during the Asian regions and European and American countries. Increments and foreign exchange transactions intensively from nearly 70 billion U.S. dollars per day during the eighties to more than 1.5 trillion U.S. dollars a day, after two decades.

Explosion of the Euro market

Was a major acceleration Aalolip Forex trading is the rapid development of the Euro market and the dollar as U.S. dollars are deposited in banks outside the United States of America. Similarly, in Euro markets are those markets where assets are deposited outside the currency of origin. He developed the Euro market and the dollar into existence in the beginning in the fifties when the oil revenues are deposited Soviet - U.S. dollars - outside the United States for fear of frozen by U.S. regulators. That has created a huge pot of dollars outside the control of the authorities of the U.S. government. The U.S. government imposed laws to restrict dollar lending to foreigners. Therefore, the euro market has become more attractive as the legislative regulations and provide less return greater. Starting in the late eighties onwards, U.S. companies began borrowing from abroad and the parent of the Euro market is a place many advantages to keeping excess liquidity and provides short-term loans and financing imports and exports.

The London was and still is the principal offshore market. Became in the eighties is the center Muftahi market the euro and the dollar, when British banks began lending to the U.S. dollar as a substitute for the pound sterling to maintain its leading position in global finance. And the location of London's geographical location (operating during the work of U.S. and Asian markets) was also a tool to maintain control over the markets, the euro.