History Of Forex Trading
This briefly explains the history of Forex trading and how it came to be due after the transition of the gold standard and fluctuating currency prices. The following events took place that lead to the abandonment of the Gold standard in the United States of America and the introduction of the global Forex trading market…
First World War: The Great War led to significant disruptions and political conditions that have weighed on government finances caused him to the gold standard in oblivion for all these years of war. It is obvious that gold was not flexible enough to help the global economy both in time of prosperity during the difficult times. The smaller countries then turned to the values represented by the USD and the GBP rather than gold.
The Great Depression: While the stock market collapsed, many countries are increasing their interest rates to discourage investors to convert their deposits in gold, but these high interest rates further crippled the economy, leading Great Britain to suspend the gold standard in 1931.
Gold Is Banned: In spite of the commonly held belief that FDR was “one of the greatest presidents” the fact remains that in 1933 Franklin Delano Roosevelt banned the personal ownership of gold except for the jewelry industry.
Gold Price Set: The United States re-evaluated the price of gold and arbitrarily fixed the price at $35.00 an ounce in 1934, prompting the increase in conversion of gold into dollars Americans in other countries.
Bretton Woods Agreement: At the end of the Second World War, the U.S. had the majority of the worlds gold. The Bretton Woods Agreement was signed in 1944 and set a fixed exchange rate between countries and also allowed others to sell their gold to the United States at a price of $35.00 an ounce.
Forex Trading Begins: In 1971, the system established by the Bretton Woods Agreement ended and the modern system of fluctuating exchange rates began which is also when Forex trading was adopted as a way for one nation to pay for goods and services between other nations.
