Forex History

Foreign exchange dates back to the distant past, when traders first began interchanging coins from different countries. But, the foreign exchange itself is quite new compared to the other financial markets. In the last hundred years, the foreign exchange has experienced some exiting changes.

The Bretton Woods Agreement, founded in 1944, remained intact until the early 1970s. At this conference, representatives from 45 nations gathered together to debate the future exchange system. The outcome of the conference was the formation of the International Monetary Fund.

It introduced an agreement that established currencies in an exchange rate system that allowed a 10% currency fluctuation to gold values, or to the dollar that was set as the gold standard.

In 1971, the Bretton Woods Agreement was first utilized due to the uncontrollable currency rate fluctuations, by 1973 the gold standard was abandoned by president Richard Nixon, and currencies where finally allowed to float freely. Afterwards, the foreign exchange quickly established itself as THE financial market.

Open 24 hours a day, 6 days a week, transactions in foreign exchange gained from about $70 billion a day in the 1980s, to more than $2.5 trillion a day now.