FOREX: History of the foreign exchange market (Euromarket and computers)

We had telling in the history of the foreign exchange market FOREX that the stage later to the deregulation that happened as a result of the abolimiento of the agreements of Bretton Woods, that of Smith and the European agreement, was the deregulation of the exchange rates that exists between a few and other currencies. This deregulation put in hands of the laws of supply and of the demand the market of exchange of currencies.


This is one of the stages previous to the foreign exchange market FOREX, because it opens the doors for the difference between the exchange rates between different pairs of currency and also for the tendencies to the rise and the tendencies to the casualty between these pairs. Since we see, the volatibilidad that brought this stage of the history was an indispensable requisite for the appearance of the foreign exchange market FOREX.


The following fact that marked the history of the foreign exchange market to which FOREX belongs was the appearance of the computers and, later, of the network. In addition to it, another important factor determined what was named the "Euro-dollars" in the called "Euromarket". We are going to explain the influence of these stages next.


To begin the history of how the heyday of the computers intervened in the development of what is today the foreign exchange market FOREX we have to recapture one of the happened consequences after the deregulation of the foreign exchange market happened.


After the deregulation of the foreign exchange market they already not existed all those classes of previous restrictions that belonged to the epoch of the agreement of Bretton Woods and of the European agreement in which there been not allowed usually to the investors to do speculative deals as it are the buy of a currency in quantity to later sell it when this one has been valued with regard to the previous one. Now the persons could carry out this type of deals, very typical of the foreign exchange market FOREX. Also it was possible to do deposits in a foreign currency to the certain country where the deposit was done. This way, for example, many persons began to deposit dollars in European banks because in them the interests were more attractive and because they had less restrictions than the American banks.


This tendency that was leading the persons to doing deposits in foreign coins to the banks and that was allowing to carry out speculative deals increased and was facilitated much more with the advent of the computers, which are the basic tool of the market FOREX. These were allowing to carry out all kinds of operations with more rapidity, without the hobbles that imply the distances and with certain safety grade.


This facility increased much more when there began to have practical importance in the world of exchange of currencies the international global network known as “Internet“. Across her, the advantages of the foreign exchange market not only would be possible for the investors who handle big capital quantities (for example, the banks of international size) but they would be accessible for any person who had access to Internet, essential fact for the constitution of the FOREX.


Like that it was like the computers and, later, the network, they marked the history of the foreign exchange market FOREX.


Another influential factor, which arises as a result and of the hand simultaneously of the previous fact of the computers and the network, is the so called Euromarket with his eurodollars. Before the heyday of the foreign exchange markets, as it it is for example the market FOREX or the futures market, the countries were trying to control and have watched the money that was going out of his borders in its own currency. With it they were thinking about how to keep his economy more manoeuvrable and to be avoided such phenomena like an unexpected inflation by the bombing of their own currency coming from exterior countries. The practice was, then, to keep inventoried and located the quantity of currency that goes out of the country knowing clearly who has it and where it is.


This practice began to get lost when the European banks began to be much more liberal with regard to the rules of the deposit and exchange of currencies, since they were already allowing to do deposits to the foreigners in his currency without hobbles, without notifications. In addition to the previous thing, the European banks were offering much more attractive money-market rates for the depositors of those who had the American banks. This way, the European banks turned into an extremely attractive alternative for the capitals in dollars and a big capital escape was generated from the United States towards Europe.


The principal country that intervened in this escape was England, since the bank of London was allowing to do loans in dollars to the North American companies without having to happen for the pound sterling.


This escape marked the beginning of the FOREX because it propitiated the currencies flow without major control panel. The currencies now might be exchanged in a country or other without the problems that was implying supporting the territorial physical limits. This way, the monetary pairs began to become slightly common in the world of the commerce.


Due to the Euromarket and the heyday of the computer with the Internet network, there were propitiated all the conditions necessary for the emergence of the foreign exchange market FOREX: A deregulation, the possibility of carrying out speculative deals, the existence in the commerce of the pairs of coins, etc.


Like that was born the market FOREX, which translates “Foreing Exchange“. With million users in the whole world, between whom the big investors are counted and also the small investors who join him across a Broker.  

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