Forex Converter History
History Of Forex Market
After the World War II the world`s leading countries signed the Bretton Woods agreement, where they agreed to endeavour to hold currency rates within the tight limits versus the USD and gold. Bretton Woods agreement was concluded in 1944. Its target was keeping global financial stability by restraining of currency movement abroad and discouraging currency speculations. Since 1876 the equivalent of gold was dominating. The countries were forbidden to devaluate their currencies in order to obtain trading priority, only devaluation up to 10% was welcomed. In the 50-ths rising volume of international trading followed by post war construction boom led to massive capital circulations. This fact destabilized exchange rates set forth in Bretton Woods.
The treaty was eventually cancelled in 1971 and the US Dollar ceased to be converted into gold. By 1973 the currencies of the most industrially developed countries started being exchanged without restraint being controlled by demand and supply of the foreign exchange currency market. Prices moved every day, volume of trade, velocity and price fluctuations accelerated in the 70-ths encouraging creation of new financial instruments, such as Contracts for difference and futures.
In the 80-ths due to emerging computers and new high technologies capital movement intensified, effacing the boundaries between Asian, European and American time belts. The volume of trades in the interbank currency market increased from $70 bln to more than $1,5 trillion just in two decades.
Euromarket
The main accelerator of International currency market development was a rapid development of Euro/Dollar market, when the US Dollars were deposited in the oversees banks. The same procedure took place for European markets when the currency was deposited out of the country of origin. Euro/Dollar market was initiated in the 50-ths when the USSR`s revenue out of oil (in USD) was deposited out of the USA on concerns of freezing the accounts by the US authorities.
It brought to significant rise in volume of US Dollars, led out of control of the US authorities. The American government adopted the laws restricting giving out the dollars to foreigners. European markets looked attractive as they were less regulated and offered high liquidity. Since the end of the 80-ths the US companies started being credited abroad finding the Euromarket a reliable center for placing extra liquidity, getting short term loans and financing of import and export.
London remains the major hub in Forex market today. In the 80-ths it became the key center in the EUR/USD market, when British banks suggested Dollars as an alternative to Pounds in order to support its leading positions in the global financial market. Convenient geographical location helps London operate in both Asian and the US trading sessions as they overlap with the European session.
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