Foreign Exchange Markets Summary

Foreign Exchange Markets Summary Fluctuating currency rates are an important aspect of external dealings; knowing how impertinent substitution markets function helps ensure success in the multinationalistic business market. A nations currency must be able to be traded and accepted by people, businesses and international banks in order for the worlds nations to take embark on in international commerce. For the last hundred years every the gold step or foreign exchange markets gestate kept the world trading currency. With the demise of the gold standard in 1973, foreign exchange markets and their players are the ones who assure international trade can occur. The Gold Standard Previous to the foreign exchange markets, and for most of the Twentieth Century, exchange rates were refractory jibe to the amount of gold for which they could be exchanged ( national Reserve till of sensitive York, nd). The gold exchange standard was put in place in 1944, when the leaders of allied nations met at Bretton Woods, New Hampshire, to set up a stable economic twist out of the chaos of World War II. The U.S. dollar was fixed at $35 per ounce of gold and all opposite currencies were expressed in terms of dollars (FRB New York, nd).

According to the Federal Reserve Bank of New York (nd), there were many advantages of the gold-exchange frame: it served as a common measure of value; it helped bear inflation in check by keeping money supply in the gold-exchange standard economies fairly stable; and long-run planning was easier as rate changes were infrequent. Under the gold standard, a organization cannot create money that is not backed by gold. Therefore, no matter how great the temptation to create much money for political advantage, without regard for economic results, a government cannot do so without the established amount of gold (Ball, McCulloch, Frantz, & Minor, 2006). In 1971, with reserves of gold falling, President Richard M. Nixon announced that the United States... If you indirect request to get a full essay, order it on our website: Orderessay

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