History of Forex Trading


The “pegging” system agreed upon in 1944 by the major Western industrialized nations in Bretton Woods, New Hampshire, collapsed in 1973. This pegging system established a par value of the major currencies vis-a-vis the U.S. dollar, which in turn was pegged at $35 to the Troy ounce of gold, known as The Gold Standard.

The par value, or parity level, was set at 1% fluctuation tolerance from the fixed rate. After a series of devaluations and revaluations in the late 60′s and early 70′s (Britain November 1967, France August 1969, Germany October 1969, U.S.A. August 1971), the par value was reset at 2.25% tolerance, according to the Smithsonian Agreement. President Nixon also abandoned the Gold Standard, directly pegging major currencies to the U.S. dollar. Following a second major devaluation in the U.S. dollar in 1973, the fixed rate mechanism was scrapped totally by the U.S. government in favor of a floating rate. This was also known. as the “dirty float“, in reference to intervention against pure market value forces by governments and Central Banks.

Today, we have floating rates for several major currencies. Initially, the opportunity to trade or speculate in these currencies was largely the exclusive domain of the international banks.However, more recently, programs have been made available through companies like GFS , enabling the general public to capitalize on these currency fluctuations.


July 22, 1944 The post war monetary system was created at a conference in Bretton Woods, N. H., along with the creation of the IMF, the World Bank and a system of fixed exchange rates tied to gold, also known as the “Pegging System“.

March 25, 1944 France, West Germany, Belgium, Netherlands, Luxembourg and Italy agreed to the Treaty of Rome, creating the European Economic Community.

1. August 15, 1971 President Nixon unveiled his Economic Policy, which suspended the convertibility of the dollar into gold.

2. December 17 18, 1971 in a meeting at the Smithsonian Institute in Washington, a new system of fixed rates was created, the major currencies were re¬valued and the official gold price was raised to US $35, but convertibility was not resumed.

3. November 12, 1973 Because of a second devaluation in the U. S. dollar, Central Banks’ governors meeting in Basel terminated the gold agreement. The dollar was allowed to float, as a “Dirty Float“.

4. November 15, 1975 The first economic summit was held at the Chateau de Ramvouillet, southwest of Paris.

5. March 13, 1979Formal initiation of EMS (European Monetary System).

6. September 22, 1985The G 5 Finance Ministers met at the Plaza Hotel in New York and launched plan for “orderly appreciation” of other currencies against U. S. dollar.

7. February 21 22, 1987The G 5 Finance Ministers’ meeting at the Louvre in Paris, declared the dollar had fallen far enough and agreed to cooperate in stabilizing it.

8. September 10, 1992Currency crises forced UK to temporarily pull out of ERM (European Rate Mechanism).

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