Forex was introduced, so citizens will have greater cash stability and reliability. Understanding the history of foreign exchange begins with the 1944 Bretton Woods Agreement, which aims to create a stable international financial institution anchored by gold. Instead of valuing all national currencies in terms of gold – as gold standards in the past did – only one currency was directly valued: U.S. Dollar. Other currencies Rated at a fixed rate in dollar terms. So, presumably, the value of all currencies is tied to gold.

There was already an international gold market in which traders could effectively guess the value of the US dollar. But the Bretton Woods system is not the only one in the U.S. Depending on the value of the gold in dollars. So when the dollar came under monetary pressure, the central banks had to intervene in the gold market to maintain the dollar’s pound of gold. In 1961, the eight largest central banks created the London Gold Pond to help control the price of gold by coordinating the sale and purchase of gold. From 1961 to 1968, the London gold pool successfully stabilized the price of gold in dollars, thus preventing the Bretton Woods system from collapsing.

After the UK government devalued the sterling against the dollar in November 1967, it changed the course of foreign exchange history – leaving the US dollar under constant speculation. The central banks in London’s gold reserve intervened to prevent the dollar’s gold bullion from breaking, by buying large quantities of gold in what could be seen as an early form of calibration (QE). However, the cost of supporting the dollar is politically unacceptable. In March 1968, the London Gold Pond ceased to exist.

After that, the market price of gold in dollars rose. The United States faced the choice of always selling large quantities of gold or breaking the gold link to the dollar to maintain the dollar’s gold bullion. In 1971, President Nixon chose the latter course.

When President Nixon stopped the dollar exchange for gold, all currencies lost contact with Gold. For the first time in the history of forex – or whatever – coins can only be valued by each other. From that moment on, the gold market played no role in international foreign exchange. Instead, traders exchanged currencies directly, thus, the birth of the modern forex market.

It has been more than 20 years since the end of Bretton Woods, when Western governments abandoned all fixed-exchange rate systems; By 1998, however, most people had adopted floating rates. Central banks intervened in the foreign exchange market and stabilized their currencies at times of high volatility. Increasingly, however, central banks have used interest rate policy to influence the behavior of foreign exchange market traders, rather than directly managing exchange rates. For the first time in forex history, forex market trading determines foreign exchange rates, rather than government policy or the value of an item.

At the same time, technological advances have brought about a fundamental change in the history of the foreign exchange market. In the 1970s and 1980s, foreign exchange trading was restricted to large banks and financial institutions; Non-banks can access the forex market only through a banking relationship.