6 facts from Forex history you must know today!
So how many facts from Forex history can you cite? The Forex Market has become instrumental in shaping the world, literally, though it hasn’t always been like that.
Nowadays, it is a daily reality that moves over $5.3 trillion dollars and never sleeps, except on the weekends. That trading volume amounts to no less than 4 times the global GDP. Clearly, it’s impossible to imagine how life would be without it.
If you want to know more, we advise you to read our other article on The Top 7 Forex Myths!
But Forex history goes a long way back and the market itself has been changing shape and adapting to the environment to suit traders’ needs. What we know today is the result of a long process that has culminated in what we see nowadays. This goes both for the technology we see behind it as well as the sheer amount of money involved.
The Forex market has no Central Bank, is essentially free-floating with currencies, and is the most liquid market in the world. As one would expect, the USD is the most traded currency, being part of almost 90% of global trades. Moreover, the price of currencies essentially floats, with Market Makers setting exchange rates.
Want to know how this giant arena start and how has it changed throughout Forex history? In this article we will have some fun exploring some fascinating Forex curiosities. If you know of any others make sure to leave it in the comments below!
Below are the 6 facts from Forex history:
Forex Curiosity #1
Did you know that the first formal “bank” was the Monte Dei Paschi di Siena? It was founded in 1472 in Italy and operates up until today. Interestingly enough, the Medici Family from the 15th century also needed to trade currencies to work with textile merchants and had to open banks around the world. They had an account book that kept track of the currencies transactions. Apparently, this has been the inception of what would become known as modern Forex.
Forex Curiosity #2
The gold standard was set in 1880, the year which many people hold as the start of modern Forex. The amount traded in Forex increased by 10.8% between 1899 and 1913, but holdings of gold experienced an increase in only 6.3%. Clearly, Foreign Exchange began to gain more and more strength,
Forex Curiosity #3
By 1913, almost half of global foreign exchange was traded using the Sterling. While the Sterling was the main currency in in Forex trade the most active centers were New York, Berlin and Paris. London, for the most part was sitting on the site in the trading world until 1914.
Forex Curiosity #4
But when was it that the Forex market began to take the shape we know today? According to some experts, modern Forex began in 1973 when banking trade, controlled foreign exchange and restrictive bind of nation-state ended. Interestingly enough, Reuters began installing computer monitors in June 1973. This was a major breakthrough that replaced the old telephones and telex which was prevalent for getting quotes. Good thing technology moves forward!
Forex Curiosity #5
Everyone knows the GBP/USD is known as the ‘cable’. Why do we have such a name for it? Simply because, before the creation of global communication satellites and the fiber optic technology, the London and New York stock exchanges were connected by a giant steel cable, immersed in the Atlantic Ocean. It’s curious to note how liquidity and volatility increased with the advance of modern technology. Nowadays, we can trade faster and easier (and even copy other traders)!
Forex Curiosity #6
Can you name the top 10 traded currencies? We bring you a list below with them! Take note that since there are 2 currencies in a traded pair, the sum total of their shares will be 200% (if you factor in other less traded pairs not on the list).
1) U.S. Dollar with over 87% of the total volume
2) Euro (EUR 33.4%),
3) Japanese yen (JPY, 23%),
4) British Pound (GBP, 11.8%)
5) Australian Dollar (AUD 8.6 %),
6) Swiss Franc (CHF, 5.2%).
7) Canadian Dollar (CAD 4.6%),
8) Mexican Peso (MXN 2.5%),
9) Chinese Renminbi (CNY 2.2%)
10) New Zealand Dollar (NZD 1.4%).
Do you know of any other Forex facts? We’d like to hear from you!
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