Forex Market History Of USA

The history of currency trading can be traced back to the Middle Ages, with the development of bill of exchange by the international merchant. These bills of exchange represented transferable third-party payments, which facilitated both flexibility and growth in the trades that included foreign exchange. But forex market history of USA can be traced back to later stages of the World War II. Read on to know more on the history of forex market in USA.

Origin of forex in USA can be dated back in the latter stages of World War II, when the Bretton Woods agreement was reached on the initiative of the USA in July 1944. Under this agreement, national currencies were set against the dollar and countries agreed to see that the value of their currency remained within a narrow margin against the dollar. The dollar was fixed at a rate of $35 per ounce of gold.

In the history of currency trading in USA, dollar had gained a premium currency position, reflecting the shift in the global economic dominance to many countries. Countries were not permitted to devaluate their currencies to their trade advantage. They were only allowed devaluations of less than 10%. During 1950s, great volume of international forex trade led to massive movements of capital generated by post-war construction. This destabilized foreign exchange rates as established in Bretton Woods. Going through the history of forex market in USA will help to get an insight of the forex trading and how it evolved.

With the collapse of Bretton Woods in 1971, US dollar became no longer exchangeable into gold. But with the advancement of technology and computers in the 1980s, currency trading picked up the pace to extend the market continuum in cross-border capital movements through Asian, European and American time zones. Transactions in foreign exchange increased intensively from nearly $70 billion a day in the 1980s, to more than $1.5 trillion a day two decades later.