Forex (also known as FX, FOReignEXchange) is an international (interbank) financial market for trading currencies. It is world (international) market and so it works round-the-clock (from Monday to Friday). That makes it more attractive in comparison to certain (national) foreign exchange markets, where trading is carried on only within working day. In addition Forex is a leader of total volume of daily transactions among financial markets. Today its daily turnover is more than $4 bln, analytics predict $10 bln increase by the year 2020.
Such a huge volume (Forex market volume in daytime exceeds approximately twice the USA annual budget and fourfold - the annual budget of Great Britain) is a guarantee of high liquidity of the market. Liquidity is a currency ability to be changed practically without any difficulties with other currency.
There are lots of professionals who work with Forex (banks, trusts, funds, transnational corporations, broker companies). Broker companies act as intermediary between the currency market and individual traders, enabling investors with different financial abilities to carry out operations at Forex and to earn (due to significant leverage) significant means.
Not aiming to give full detailed history of financial markets, we will mark some of the most important dates of its development.
The currency market has a great history that starts in the Ancient Middle East. In the Middle Ages the appearance of international banks rises the necessity of means of payment that could be valid when offered to third parties. This period is marked with increase in number of transactions, their variety and flexibility.
By the end of XIX century the currency market takes more or less developed forms. In 1867 in Paris it was registered as legislative structure. There were no fluctuation of currency at that period as all the currencies were tied to the gold. This period is called The Epoch of Gold Standard.
The next important date is 1944 when in the Bretton Woods (USA) the Bretton Woods Agreements were signed. According to them all the world currencies were tied to USD, and the latter - to the gold. The agreements established the International Monetary Fund (IMF). The rate changes were strictly regulated within 1%.
In 1971 USA gave up on free convertibility of dollar to the gold, and as a result of the agreement signed in Washington (USA) - the Smithsonian agreement, the fluctuations to 4,5% against dollar and to 9% against non-dollar pairs became possible. In fact it brought the Bretton Woods system to the end.
In 1976 IMF proposed to confirm legislatively the relationships between currency market participants in the form of a new agreement which was signed in Kingston (Jamaica) by the leaders of 20 largest economic countries, except those in communist block. As the result of this (Jamaican agreement), USD became international reserve currency with function of universal mean of payment and the evaluation of currencies of other countries. This agreement also officially opened the possibility to free-floating rates, although some countries ignored the established in 1971 restrictions on currency fluctuation.
Probably, it is the moment of beginning of the Forex market in its actual form. With time and development of telecommunication technologies, the trading in the building of stock exchange gave way to phone dealing and then to electronic dealing systems. Today practically all the transactions take place via Internet.
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