The Forex (Foreign Exchange) market is the largest financial market in the world, with a daily trading volume of several trillion dollars. Below is the history of the formation and development of this market:
The Gold Standard Era (1870 – 1914)
During this period, countries pegged the value of their currencies to specific amounts of gold. This gold standard system helped stabilize exchange rates and promote international trade, but it was vulnerable to major events like World War I, where countries had to print money to fund the war, leading to inflation.
The Post-World War II Era (1944 – 1971)
The 1944 Bretton Woods Conference established a system of fixed exchange rates, where currencies were pegged to the U.S. dollar, and the U.S. dollar was pegged to gold. However, the imbalance between the amount of gold and the number of U.S. dollars, as well as the rapid economic growth of other countries, put significant pressure on this system, leading to its collapse in 1971.
The Era of Forex Liberalization (1971 – present)
After the collapse of the Bretton Woods system, the world moved to a system of floating exchange rates, where the value of currencies was determined by market supply and demand. This shift significantly boosted the development of the Forex market, with an increase in trading and price volatility. Additionally, the emergence of foreign exchange derivatives and the development of emerging markets played an important role.
The Digital Age (1990 – present)
The development of the Internet and information technology ushered the Forex market into a new era. This technology not only made the market more accessible to individuals and small investors but also helped traders use technical analysis tools and automate trading. The development of online trading platforms and mobile applications has made the Forex market more flexible and global than ever.
The Forex market has grown significantly since its early years and has now become an important part of the global financial system. However, like any other financial market, Forex also has its risks and requires understanding and experience.
