Since the advent of the freely floating exchange rate system, after the decision by Nixon to remove the Dollar from the Gold Standard, currency valuations became much more volatile. This volatility makes it possible to speculate one currency against another. Speculators quickly seized the advantage and the largest most liquid markets were born. Not only did the international banks provide the service of exchanging foreign currencies to facilitate tourism and international trade, but they soon discovered that speculating in the values of currencies was a profitable venture for themselves. Banks set up trading desks and were soon the dominant speculators in the forex markets. They traded for their clients and for their own account. Thus the interbank system of trading foreign exchange grew from $500 billion per day to the current level of $3 trillion per day.
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