Forex: History of development and features
Forex did not appear yesterday. The market has a long history, from which several lessons can be learned. The market has had its ups and downs. A good trader will never ignore the key Forex events because they are not only very interesting but can also have a direct impact on his work. We need to learn from history. In addition, it is very exciting because you need to know everything, including the moment of origin, of your favorite business. Only then can you truly say that this is your favorite thing.
History of the forex market
The history of the emergence and development of Forex is a very interesting and significant element of international relations. Just think about the main principle of Forex trading. This is a currency exchange. Naturally, representatives from different countries participate in this process. Forex can be called a key element of the financial relationship between representatives of different nationalities. The formation of the interbank currency exchange market at free prices has gone through several stages:
- August 15, 1971. US President Richard Nixon refused to implement the Bretton Woods Agreement, according to which the dollar was backed by gold, and other currencies by the dollar.
- December 1971. The Smithsonian Agreement was signed in Washington. According to its terms, currency fluctuations against the US dollar could be up to 4.5% and for currency pairs without the dollar’s participation, up to 9%. Prior to the signing of this agreement, the exchange rate fluctuations were supposed to be 1%. This finally destroyed the Bretton Woods system.
- January 8, 1976. In Jamaica, in the city of Kingston, the Jamaican currency system was adopted, the main points of which were laid out in March 1971 by representatives of 20 countries in the non-communist bloc. It is January 8, 1976, that is considered the official birthday of Forex.
According to the new system, the price of currencies depended on supply and demand, not on the gold standard. The exchange rate began to fluctuate, giving rise to a new financial industry – currency trading.
The development of the forex market and the development of telecommunications, were prerequisites for the possibility of earning money on the game of exchange rates and making a profit on the differences in the value of currencies. And the further creation of the Internet has only increased the boundaries of the Forex financial market. To date, trading on the international stock exchange can be conducted 24 hours a day, five days a week.
What exactly influenced the creation of the forex market?
To begin with, in order to be able to influence the value of currencies, participants in currency exchange operations and banks servicing these operations had to be present on the foreign exchange market in order to receive accurate information about the economic condition of countries, as well as monitor the quotes of a particular currency.
Also, the main banks of the countries can now influence the value of the currency, hence the policy pursued by these states.
History is necessary and important. Do not think that the history of Forex is just fascinating stories that you can read in your free time when you need to get away from work or household chores. The history of Forex is an important lesson. Experienced traders have studied the history of Forex from the moment of its opening to today. This helps them fully get into the spirit of trading and learn really useful lessons.