Forex History

FOREX HISTORY
Forex stands for the foreign exchange market. In the foreign exchange market, currencies from one country are exchanged for the currencies of other countries. These exchanges are usually made with large amounts of currencies, the main bulk of the trading is done by large organizations. Forex history developed over many years to the become the largest financial market in the world today. Through World War I, foreign currencies were based value of gold. Until this period, the value of paper money was represented by the value of the countryÕs currency compared to gold. Forex history truly begins after World War II, with an increase of the problems of relying on the value of gold as each countryÕs currency. The founding of the Bretton Woods Agreement in 1944 important to Forex history. It created a system of currency value that was based upon the dollar, the value of the dollar was supposed to be fixed on the rate of gold in order to establish a stable market. The purpose of this agreement was to avoid an international monetary crisis, as what had led to World War I and played a major role in the outbreak of World War II. The Bretton Woods Agreement was important in the development of Forex history and it lasted through the 1970Õs and finally established controls over the value of currencies. With this agreement countries were to keep the value of the currencies close to the value of the dollar and the rate of gold. This agreement also prohibited countries from devaluating their currencies in order to have an advantage in the foreign market. These guidelines served to control the currency of the world for almost the next thirty years of Forex history. In 1971 it was seen that this was not a reliable way to stabilize the currency of the world. When the U.S. dollar itself devalued against the value of gold. Important to Forex history was when The Bretton Woods Agreement was then abolished.

The U.S. dollar ceased to be what other foreign currencies would measure the value of their currency by. The dollar became the measure of foreign currency a few years later, again the dominance of the U.S. dollar in the Forex market. The U.S. dollar again made its way to importance in Forex history. In the 1980Õs, when foreign trade increased due to many technological advancements foreign currency exchanges increased dramatically. The 80Õs saw a rise in investing in Euromarkets - markets where currency was deposited in the market of a country that had a different currency.
In the late 1990Õs, the euro was introduced as a way to establish a fixed foreign market, a desire for market stability that Forex history had been longing for since World War I. The euro was the first common currency to be used in Europe. Countries in Europe that are part of the European Union began using the Euro in place of their currencies. When the Euro came on the Forex market is made an important mark in Forex history. It is now a strong currency that is in high demand.


The 2. Even though currency trading has been around since the times of ancient Egypt, which at that time the market was extremely primitive, and there were no advance trading tools as today's fundamental analysis, for example.
The first currency coins were used at the times of the pharos, and the first paper notes were then introduced by the Babylonians. Later on, the roman coin called aureus was used, which was followed by the denarius. Both coins had worldwide use, making them the first global foreign currency coins.
The Bretton Woods System (1944-1973), came after the great instability of World War II. England and other European countries were left in ruins, after the war ended, while the US's economy was left relatively stable and strong.
The USD became the prominent currency after WWII, mainly because of the war. The Dollar also became the new global reserve currency, and remained so throughout the rest of the Forex history. This was agreed upon in the Bretton Woods conference, when all of the other foreign currencies were pegged to the USD, and a new international financial network was formed.
In 1971, the Smithsonian Agreement was signed by ten of the major financial powers, but it's attempt to improve stability to the current Forex history failed.
Free Floating exchange rates came into use when the Bretton Woods agreement ended. This occurred after this international financial system was in operation for three decades in the Forex history.
During 1973, the UK, facing financial problems, floated it's currency. Other currencies began to lose value, and this led the European economies to also float their currencies.
1994 saw the first online currency trading introduced to Forex history. This had a large impact on the development of the Euro currency, and introduced a new major contender to the control of the USD in the Forex history. By 2002 the Euro became the official currency for 12 European nations, and in the past few years more nations have joined this agreement. The modern online forex history offered new options for the online trader, such as the use of margin account to leverage investments, and this is all thanks to the contribution of the internet to the forex history.
Jim Barns, Market Analyst

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