1.8 Forex Market History

Here’s some history to tell you how it came about that you can trade on the worlds largest market sitting in the comfort of your own home.

History of foreign currency exchange market.

 

Year

 

 

Event / Development

 

 

1944

 

The global chaos after World War II resulted in the establishment of The Bretton Woods Accord, intended to stabilize the global economy. The concept behind Bretton Woods System was to tie all currency exchange rates against gold.

 

 

 

 

 

1971

 

On August 15th 1971 The United States declared the termination of the convertibility of the US dollar against gold i.e. the exchange rate of the dollar no longer tied to gold. This was the beginning of the end of the Bretton Woods System.  The Smithsonian Agreement is established. This widened the band within which currencies could be allowed to fluctuate. According to Smithsonian Agreement, the US dollar was pegged with the gold at $38 per ounce but with 2.25% trading bands. This made US dollar practically a flat currency and remaining G-10 nations agreed to base their exchange rates versus the dollar.

 

 

1972

 

Europe tries to do away with its dependence on the U.S. Dollar by establishing The European Joint Float.

 

 

1973

 

Failure of both the Smithsonian Agreement and European Joint Float, resulting in the official switch to a free-floating system.

 

 

1978

 

Europe’s second attempt to cut loose form the dollar - the European Monetary System is introduced.

 

 

1978

 

The International Monetary Fund gives its blessings to the free-floating system.

 

 

1993

 

Failure of the European Monetary System – the path clears to a worldwide, free-floating system.

 

 

1994

 

On-line currency trading is introduced by some banks.

 

 

2000

 

New regulations put in place for securities derivatives, including currencies in futures or forwards, under the Commodity Modernization Act.

 

 

2002

 

12 European nations adopt the Euro as their official currency on January 1.

 

 

2002-2009

 

The CFTC and NFA initiate the NFA Compliance Rule 2-43. The NFA mandates the minimum margins to be paid by retail FX customers.

 

 
Previous Lesson Next Lesson

 

 

  • Forex Market History

 

 

 

Forex Trading Alerts subscription


Name:
Email:
Confirm Email:
9+5

We will send email alerts as soon as the Forex analysis is updated.
Request you to check the Junk (spam mail) folder immediately in case Google group mail is not received in Inbox.

Enter Forexabode Blog

Enter Forex Abode Community

Forex Rates