Get to Know Important Events and Events Regarding Forex Market in the Past
In the financial market there are many important events and events in history, especially history in the forex market. In this article we will discuss important events in the currency market, let’s discuss.
The Smithsonian Agreement is named according to where the meeting took place. This meeting became one of the important events in the development of the currency trading system. According to records, this meeting was held on December 18, 1971. Followed by several major countries such as the United States, Britain, Germany, France, Italy, Canada, Japan, the Netherlands, Belgium, Sweden and Switzerland. The 11 countries agreed to several important points, including:
- Decrease in the value of the United States dollar by 8%
- Increased trade cooperation from (plus / minus) 1% to (plus / minus) 2%.
- Changes to the US dollar’s reference to the value of gold from $ 35 per ounce to $ 38 per ounce.
What’s interesting here, this Smithsonian agreement makes currency exchange rates recalculated. Unfortunately, the results of the Smithsonian agreement also did not address the problems that occurred at the same time as with the Bretton Woods agreement.
European Joint Float
In an effort to reduce this risk, the European Economic Community which consists of West Germany, France, Italy, the Netherlands, Belgium and Luxembourg made a system called the European Joint Float system in April 1972.
Impact of the Smithsonian Agreement and the European Joint Float
It didn’t take long from the Smithsonian Agreement and the European Joint Float to have an impact. After a while, the supply of US dollars increased, the value of gold surged to more than $ 100 per ounce, more importantly, making the government and outsiders control and reduce the exchange rate of the US dollar.
At the 7-8 January 1976 meeting held in Jamaica, members of the International Monetary Fund (IMF) finally inaugurated the free-floating currency system. In this Jamaican agreement, there are a number of things agreed upon, namely:
- The traded currency has floated
- IMF members can enter the forex market when needed.
- Then the IMF will return all of its gold to its member countries.
By agreeing to the Jamaica Agreement, world leaders finally agreed that they would not control currency exchange rates.
What You Need To Know About History in the Forex Market
Reading the histories of the forex market above gives us an idea that world leaders or other important institutions cannot control the exchange rate. In addition, we also have a viewpoint that no one can control prices in the forex market.
Price movements of a pure currency exchange rate from the law of supply and demand from market participants. Trade flows, investment flows and the amount of money in circulation have an important role in driving interest in supply and demand for currency values. It should be remembered again, that the intervention and manipulation of currency values of the government and the central bank are only temporary in order to stabilize the exchange rate of the currency.
The forex market is quite interesting right? Many beginner traders hope and say that they are able to conquer forex. Well, we think it’s enough to wish and start to open your eyes. The forex market cannot be controlled and that is the interesting side. So, happy learning and happy trading.