Short data on the origin and development of the foreign exchange market
Friday, 8 August 2008
Currency exchange has a long history and can be traced to the ancient Middle East and the Middle Ages when changes began to take shape after the merchant bankers devised bills of exchange, which were transferable to Payments third that allowed flexibility and growth in foreign trade relations.
The modern foreign exchange market characterized by periods of high volatility (which is a frequency and amplitude of a price alteration) and relative stability was formed in the twentieth century. In mid 1930 the British capital, London has become to be the main centre of exchange and the British pound, has served as currency exchange and keep as a reserve currency. Because in the old-time foreign exchange was traded on the telex machines, or by cable, the book usually has the nickname "cable".
After World War II, where the British economy was destroyed and the USA was the only country unscarred by war, the U.S. dollar under the Bretton Woods Agreement between the USA, Britain and France (1944) has become the reserve currency for all capitalist countries and all currencies were pegged to U.S. dollar (through the formation of lines currencies maintained by the central banks of countries affected by interventions or currency purchases). Meanwhile, the U.S. dollar was pegged to gold at $ 35 per ounce. Thus, the U.S. dollar has become the world reserve currency. Under the same agreement has been organizing the International Monetary Fund (IMF) today reported substantial financial support for developing countries and former socialist countries carry out economic transformation.
To carry out these objectives, the IMF uses instruments such as the Reserve trenches, which allows a member to draw on its own quotas reserve at the time of payment, credit and trenches drawings stand-by. The letters are the standard form of IMF loans unlike those of the compensatory financing facility extends financial assistance to countries with temporary problems generated by the reduction in export earnings, the stock financing facility to help storage of raw materials in order to ensure price stability in a specific product and expansion of facilities to assist members with financial problems or amounts for periods exceeding the scope of other facilities.
In the late 70-s floating currencies was officially mandated that has become the most important milestone in the history of financial markets in the twentieth century led to the formation of Forex in understanding contemporary. It is the currency May be exchanged per person and its value is a function of supply and demand forces on the market, and there are no points of intervention that must be respected. In exchange has seen spectacular growth in volume since currencies were allowed to float freely against each other. While the daily turnover in 1977 was 5 billion dollars, it rose to U.S. $ 600 billion in 1987, reached U.S. $ 1 trillion mark in September 1992 and has stabilized at around $ 1.5 trillion by the year 2000.
Key factors influencing this spectacular growth in volume are listed below. A great role belongs to the increased volatility of exchange rates, increasing mutual influence of different economies on the banks rates set by central banks, which primarily concern the exchange rates of currencies, the intensification of competition in markets for goods and, at the same time, smelting companies from different countries, the technological revolution in the field of currency exchange. The last briefing in the development of automated systems to process and the transition to currency exchange through the Internet. In addition to processing systems, corresponding to systems simultaneously connect all economic operators throughout the world by electronically duplicating the brokers on the market.
Advances in technology, software and telecommunications and experience have increased the level of operators' sophistication, their ability to generate profits and properly manage foreign exchange risks. Hence, the trade has led to the sophistication increase in volume.
posted by Master @ 04:40,