History of Forex

What is the history of the Foreign Exchange Market?

In the most basic sense, one could claim that Forex, which entails the exchange of one currency for another for financial advantage, begun when the nations started minting currencies. Now in 1931, when the Great Depression hit the U.S. markets followed by the removal of Gold standard, the foreign exchange market suffered badly.

Earlier, the gold standard was used to describe any currency that was pegged. So for instance, if you had one US Dollar, you could take it to the government and trade it for a fixed amount of gold! In the U.S. on an average $20.67 yielded you with 1 ounce of the gold year after year.

But in the period between 1931 to 1945, there was a 14-year long timeframe when fiat, non-backed paper money turned dominant. As a result of this, the world witnessed major economic imbalances between countries which later became a big cause for the beginning of World War I.

Now, after 1931 up until the 1970s the world experienced fast-paced evolutionary changes that impacted global economies greatly.

By 1971 the forex market got established completely. But in its infantile stages that is during the era between the middle ages up to WWI, the market was relatively stable and not a ground for much speculative activity. It did not cater to the interest of investors. However, after WWII the picture changed. Now the markets became volatile and the speculative activity increased tenfold!

In 1963, a change in policy was introduced by the government when the new federal reserve notes (with no promise to pay in ‘lawful money’) with no guarantee and no value were released. Two years later that is in 1965, silver was eliminated from all coins. Lyndon Johnson signed the coinage act of 1965, which terminated all previous legislation set up by George Washington 173 years earlier.

Later in the early 1980s, the telecommunication and computer industries grew, encouraging the global financial markets to surge worldwide. All the markets then became accessible to everyone regardless of the time zone and geographical hindrance. Trading was only available through combinations of technological, communicational and political advances. All charting had to be done by hand on paper while all trading orders had to be executed via telephone!

So, this is the relative history of the Forex market. Now, if you are eager to start your own journey to financial freedom and interested in learning more about it, then click on this link to schedule a free consultation session with us at Strictlycharts by filling out this form!