Forex History

FOREX HISTORY- THE HISTORY OF STABILITY IN THE CURRENCY

The Forex is expanded as the foreign exchange market, where it exchanges one currency to the other for the trading purposes. It serves as the exchange where the trade is done easily with the central banks of the nations, governments of different countries. Let us see the evolution of such a market in the world by knowing the Forex history.

BARTER SYSTEM OF TRADING

Earlier, the Forex history starts with the people involved the barter system of trading. This is a type of trading where value of a good is expressed in terms of the other available good. The trade is done by exchanging such goods with one another. This type of system involves the inequality in the value of the goods and created the confusion in trading between the precious goods and the essential goods. As an alternative, they even exchanged the metals like gold and silver. These metals are accepted as the alternative way of exchanging the goods and it acts as one of the best ways in the regions of Asia and Africa.

CONVERTIBILITY TO GOLD

The system involved in most of the countries during the commencement of the First World War was the convertibility of the currencies based on the gold reserves. This is considered as one of the important system in the Forex history. This system made the economy of a country to follow the irregular curve on the growth. When the economy of a country is good, it starts to deal the best from other country leading to the diminishing of the money in the country. When the money reserves are reduced, the gold reserves will also reduce to lower the price of the commodities. It decreases the money supply in the country making more prone to the access of other nation by its high gold reserves. Due to these problems, they are removed in the Forex market in the year 1931 which affected the various economies in the world.

BRETTON WOODS AGREEMENT

The Bretton woods agreement held in the year 1944 rejected the acceptance of the exchange based on the US dollar. It created a fixed exchange rate and made the 35 US dollars for the one ounce of gold. This decision created a turning point in the Forex history of evolution. During the year 1971, the US dollar was not considered as the best way of exchange of currency by its increased budget and the deficits in the trade structure of the US government. This is a vital step found in the Forex history which forms the base in creating the Forex

COMMENCEMENT OF THE FOREX

The investors and the financial institutions in various countries started the FOREX exchange made a remarkable change in the market and in the Forex history. It was first dealt with the global banks, central banks and limited financial institutions. But, now it accepts many institutions which made the FOREX as the largest financial market in the world. The commencement of the FOREX made many nations to exchange the currencies in the trade easily.