Understanding the History and Future of the Forex Market

With use of the Internet and worldwide communication, the globe has gotten smaller. It has enables businesses and individuals in different countries to barter, trade and do business together more effectively. International trading has fostered a market where people can convert these transactions over national and international boundaries using a currency of their choice.

The foreign exchange market (FX), also called forex, makes foreign currency exchange more unified and simplified. It also promotes a more stable global economy based on the flow of capital, goods and services.

The FX market makes it possible for individuals and businesses alike to participate in instant currency trading. Various currencies are bought and sold against each other using electronic communication which reaches across all time zones world-wide. The biggest forex trading markets are Tokyo, London and New York, United States of America. Secondary forex market locations include Frankfurt, Hong Kong, Zurich and Singapore.

The History of Forex

1875 – The Gold Standard Monetary system was invented.

1944 – Gold became the preferred standard instead of the US dollar for conversion of the world’s currencies through the Bretton Woods Agreement. As a result, the dollar then became the new global reserve for currency trading. The World Bank and the International Monetary Fund were both created after World War II ended.

1971 – Establishment of the Smithsonian agreement.

1972 – Establishment of the European Joint Float.

1973 – After the failure of both the European Joint Float and the Smithsonian, the free-floating currency system took hold.

1978 – Introduction of the European Monetary System in other countries.

1978- The International Monetary Fund mandated the free-floating currency system.

1993 – Establishment of a worldwide free-floating currency trading system after the Monetary System fails.

2006 – Incorporation of FX broker FxPro.

2008 –FxPro authorised by CySEC.

2009 –Nice, London and Vienna offices and partnerships are created with other companies, such as Cyprus FIA and BMW Sauber F1 Team. A Webtrader online forex trading platform launched at this time.

2010 – Forex brokerage firms become active in sponsoring national sports. These included teams in England’s top football league, as well as the World Rally Championship.

Statistical Information

Statistics from the Bank for International Settlements cite that from April 2007 to April 2010, there has been a 20 percent increase in average daily turnover in global forex markets, rising from $3.21 trillion to $3.98 trillion in three years.

Approximately $1.5 trillion of the $3.98 trillion involved spot forex transactions. About $2.5 trillion was traded in outright forwards, FX swaps and other currency transactions.

UK FX trading accounts for 36.7 percent of the total. The United States is in second place with a 17.9 percent. Japan comes in third with about 6.2 percent.

Author is a freelance copywriter who writes about forex and forex brokers. This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Any opinions made may be personal to the author and may not reflect the opinions of FxPro.