blog




  • Essay / The importance of the foreign exchange market - 1156

    “In the 1930s, the United States fixed the value of the dollar at a single and immutable level: 1 ounce of gold was worth 35 dollars. » (Grabianowski, 2004) Many other countries, after World War II, began to base the value of their currencies around the dollar. They already knew what the value of the dollar was in relation to gold. Let's say if a currency is worth three times more gold than the dollar. You can imagine that it's worth three dollars. After many years, the dollar was hit by inflation and they couldn't keep up. According to Grabianowski (2004), "the United States could no longer claim that the dollar was worth as much as it had been, so the value was officially reduced so that an ounce of gold was now worth 70 dollars. » If you look, the conversion was 1 ounce for $35, now it's $70. The value of the dollar has been cut in half. In 1971, the United States abandoned the gold standard and today "the US dollar and euro account for approximately 50% of all foreign exchange transactions worldwide." » (Grabianowski, 2004) this means that most of what we trade today is these two. currencies. If you go online, most exchange rates are represented in the United States.