The foreign exchange market, commonly referred to as Forex, is the largest financial market in the world, with an average daily turnover of around $5 trillion. It is the market where different currencies are bought and sold, with the aim of making a profit from the fluctuations in their exchange rates.
The history of Forex dates back to ancient times, when merchants and traders exchanged currency to facilitate international trade. However, the modern Forex market as we know it today did not exist until the mid-1970s, when the Bretton Woods Agreement was abandoned.
Before the Bretton Woods Agreement, the value of currencies was fixed to the value of gold. This meant that the exchange rate between two currencies was fixed and did not fluctuate. However, this system proved to be unsustainable, and the agreement was abandoned in 1971.
After the Bretton Woods Agreement, currencies were allowed to float freely, meaning that their exchange rates were determined by market forces such as supply and demand. This led to the development of the modern Forex market, where traders could buy and sell currencies with the aim of making a profit from the fluctuations in their exchange rates.
The first foreign exchange market was established in 1971, shortly after the abandonment of the Bretton Woods Agreement. The market was created to provide a platform for banks and other financial institutions to trade currencies with each other.
Initially, the Forex market was only accessible to large financial institutions such as banks and hedge funds. However, with the advent of the internet and electronic trading platforms, the market has become more accessible to individual traders as well.
Today, Forex trading is open 24 hours a day, five days a week, with trading sessions starting in Asia and ending in North America. This allows traders to trade currencies at any time of the day, depending on their preferences and trading strategies.
In conclusion, the modern Forex market as we know it today was established in 1971, shortly after the abandonment of the Bretton Woods Agreement. The Forex market was created to provide a platform for banks and other financial institutions to trade currencies with each other. With the advent of electronic trading platforms, the market has become more accessible to individual traders as well. Today, Forex trading is open 24 hours a day, five days a week, allowing traders to trade currencies at any time of the day.
