20 години печелим заедно
Market Evolution FOREX
Every day, billions of dollars' worth of currencies are traded on the world's financial markets, enabling global trade and investment. This tutorial provides the background to the modern era of foreign exchange markets, detailing the international agreements and the impact of technology on this 24-hour-a-day business. Between World Wars I and II, currencies operated under a fixed exchange rate system based on gold and silver standards. Known as the era of convertibility, governments honored currencies they had issued against a specific amount of gold and silver. The dominant world currency was sterling, with the US dollar next in importance. Convertibility ceased around 1929, at the beginning of the Depression. During the World War II, the foreign exchange market virtually ceased to exist.
The Bretton Woods Agreement 1944
'Par value' system based on a gold-exchange standard was introduced.
International Monetary Fund (IMF) and International Bank for Reconstruction and Development (World Bank) were founded.
USD replaced sterling as dominant currency on the market.
Clearing Arrangements
Agreement on Multilateral Compensation 1947.
European Payments Union (EPU) 1950-1958.
European Monetary Agreement (EMA) 1958-1973.
Disintegration of the Bretton Woods Agreement
Formation of the Gold Pool in 1961 (abandoned in 1968)
Introduction of the Special Drawing Right (SDR) in 1969.
Strong currencies have to revalue or float upwards.
Smithsonian Agreement 1971
Devaluation of the dollar and upward realignment of other currencies.
European Snake 1972
Prompted by German skepticism over the Smithsonian Agreement, European currencies maintained narrow bands with each other and floated together against the dollar, i.e., a mini-system was formed.
OPEC Oil Crisis 1973-74
In response to the inflationary impacts of the oil crisis, countries began adopting money supply targets with resultant increases in interest rates. These interest rate changes led to vast amounts of internationally mobile short-term capital moving between countries in search of higher interest rates, thus reinforcing a floating rate regime.
European Monetary System (EMS) 1979 objectives:
to facilitate convergence towards greater economic integration and stability among EU members;
to establish a managed exchange rate system, with intervention points of +/- 2.25% from agreed central rates for most currencies, i.e., the ERM;
to establish the ECU as the key monetary unit of the EU.
The parity grid was the cornerstone of the ERM. Bilateral central rates for each currency formed the basis of the grid.
European Economic and Monetary Union (EMU) 1990-2002
the circulation of a single currency (the euro) within the participating Member States of the European Union (EU);
the operation of a single European Central Bank (ECB);
a common monetary policy between the participating Member States of the EU;
Exchange rates between the participating countries were fixed on January 1, 1999, with Euro coins and notes brought into circulation in Jan 2002.
Technological Revolution
The technological revolution resulted in greater speed and efficiency of communication. Dealers were able to expand their activities due to developments in computerized money payment systems and information systems. Technological advances led to higher levels of speculation and volatility.
Other Developments.
The authorities involved in the G7 process attempt to peg exchange rates within selected target bands or reference ranges.
The Plaza Accord (1985)
The Louvre Agreement (1987)
The international payments system is effectively based on a de facto dollar standard