A Brief Description on the History of Forex Market as How Forex Market started and What was used earlier, as a Base for Foreign Exchange Transactions?
Since 19th Century, the creation of gold as a standard monetary system is marked as one of the most important significant event in the History. This facilitated many countries to evaluate their currency value by attaching it with one ounce of gold and by this it became the first standardized method of currency exchange between two countries.
After World War II in 1944, the Bretton Woods System came into effect which formed a fixed exchange rate system by replacing gold with us dollars. After this us dollar became the primary reserve and the only currency which was backed by gold.
In 1971 Bretton Woods system collapsed as dollar did not suit being the sole international currency as it was under severe pressure from increasing US budget and trade deficits. This Breakdown gave birth to a new system called free floating foreign exchange rates in the foreign exchange market.
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