The History of Forex Trading

forex-history.jpgIn the very beginning, there was a barter system like exchange of goods with one another as per individual requirement. But its obvious limitations led to the establishment of mostly accepted channels of exchange. At the First World War, most of the central banks moved ahead to support their currencies with convertibility to gold. But at times, this resulted in political instability due to devastating inflation. This was due to the expanding supply of paper money with no gold coverage. Therefore, Forex controls were initiated to protect local national interest.

 

Later on, during the Second World War, the USA introduced the Bretton Woods agreement in July 1944. As a result, this agreement led to a system of fixed exchange rates that re-established the gold standard to an extent and also stabilized the dollar at USD 35/oz. It also fixed the other prominent currencies to the dollar and thus made it permanent.

 

The last few decades have witnessed the developing of Forex trading into the largest global market. By now, all the restrictions from the capital flows have been put off in several countries. It has resulted in the independency of the markets to settle Forex rates as per their perceived values.

 

Today widely traded currencies include US Dollar, British Pound, Swiss Franc, Japanese Yen, Canadian Dollar and Australian Dollar. Trade in Forex is done for five days a week, round the clock with constant access to dealers throughout the world. It is not centered on any physical location or any exchange, as it is with the stock or future markets. Transactions take place between two corresponding persons over a phone line or through an electronic network.

 

 

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