"where did it all Begin" Part 5
The team at The Forex Trading Floors hope you are enjoying our blogs on “Where did it all begin”.
This week we will be continuing the series of “Where did it all begin “with Post World War 2.
Post World War 2.
After World War 2, the Bretton Woods Accord, formally known at the United Nations Monetary and Financial Conference was signed allowing currencies to fluctuate within a range of 1% to the currencies par.
President Nixon was publicly acknowledged with ending the Bretton Woods Accord and fixed rates of exchange, bringing about eventually a free floating currency system. After bringing to the end of the enactment of the Bretton Woods Accord (during 1971) the Smithsonian agreement, which was an agreement that adjusted the fixed exchange rate that allowed trading to range to 2%.
During the period of 1961 and 1962 the amount of foreign operations by the U.S. of America's Federal Re-serve was comparitively low. Those involved in controlling exchange rates found the limits of the Agreement were not practical or realistic and so brought this agreement to an end in March 1973, when sometime afterward none of the major currencies were maintained with a capacity for conversion to gold, organisations relied alternatatively on the reserves of currency.
During the period 1970 to 1973 the amount of trades occurring in the market trebled. According to Gandolfo during February and March 1973 some of the markets' were "split", so a two tier currency market was subsequently introduced, with dual currency rates. This was formally ended during March 1974.
Foreign exchange futures contracts were introduced in 1972 at the and are actively traded relative to most other futures contracts. Some governments of emerging economies do not allow foreign exchange derivative products on their exchanges because they have capital controls.
Reuters were introduced during June 1973 and computer monitors, replacing the telephones and telex used previously for trading quotes.
Foreign exchange is an over the counter market where brokers and dealers reach an agreement directly with one another, so there is no central exchange or clearing house. Foreign exchange fixing is the daily financial exchange rate fixed by the national bank of each country.
A number of the foreign exchange brokers manage from the UK under Financial Services Authority regulations where foreign exchange trading using margin is part of the wider over-the-counter derivatives trading industry that includes Contract for differences and financial spread betting. Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. The asset market model of exchange rate determination states that "The exchange rate between two currencies constitutes the price that just balances the relative supplies of and demand for, assets denominated in those currencies." A foreign exchange option is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. In the context of the foreign exchange market, traders disolve their positions in various currencies to take up positions in safe haven currencies, such as the US Dollar.
In the whole history of 1976 the very largest of all purchases of dollars was when the West German government achieved an almost 3 billion dollar addition, this occurrence indicated the impossibility of the balancing of exchange stabilities by the measures of control used at the time and the monetary system and the foreign exchange markets in "West" Germany and other countries within Europe closed down for two weeks. In fact 1973 marks the point to which nation state, banking trade and con-trolled foreign exchange ended and complete floating, comparatively free conditions of a market typical of the situation in contemporary times began, although another proclaim the first time a currency pair were given as an option for American traders to purchase was during 1982, with additional currencies available by the next year.
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