Thread: Foreign Exchange Market History

Until the mid-seventies, major industrial economies were governed by the Bretton Woods agreements of 1944. The Bretton Woods agreements, and named after the place of the international conference on the creation of this new international monetary order, have forced the participating international economies to peg their currencies to the dollar, which itself varies in a intevalle of about 1% of the rate prevailing in gold.

The architects of the Bretton Woods hoped to prevent countries from artificially devalue the currency to make their goods more attractive on the international market, which led in part to a catastrophic collapse of the global economy in 30 years .

The system he set up lasted for three decades. The collapse of confidence in the dollar, however, led to an new international monetary system of floating rates, meaning that regular market forces rather than government intervention, would determine the value of currencies. It is from this new system that the modern Forex market was born.

In a system of floating exchange rates, market demand determines the relative value of currencies. It is believed that such a system is self-correction, since any inefficiency is destroyed under the contract. If, for example, global demand for a particular currency falls, goods will become cheaper, and thus the value begins to increase with the new application.

In a floating exchange system, traders can exploit inefficiencies in the market before it self-corrects. These traders are called arbitrageurs, and they are able to use online brokers to perform their transactions. If you want to start sharing in the foreign exchange market, thank you for visiting our page to find a broker dealer for you.

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