And the International Monetary Fund and the Bretton Woods agreement is also aimed at creating a kind of consistency in monetary policies and exchange rates between the countries of the world through the development of the foundations of movement of funds between heads of States, the basis for the facilitation of international trade, by linking the price of world currencies in U.S. dollars with a small margin of increase or decrease in no more than 10% of basic price linked with the U.S. dollar gold price and agreed time on the price of $ 35 per ounce.
Prior to the establishment of the Convention and since 1867 was mainly associated with exchange rates or the letter of the gold price, making it almost constant if the differences in the exchange rate, however, because any meaningful exchange of international trade was conducted through the exchange rate compared to gold ounces.
But what drew the attention of the already strongly in trading foreign currencies is carried out by the name of a university professor, Milton Friedman, in 1967, Milton made to a bank in the city of Chicago has applied for a loan in pound sterling because Milton Friedman notice very high in the price of the pound sterling and from He wanted to take advantage of this loan by using the pound sterling in the sale and purchase of the U.S. dollar, sterling and then buy back again after the low price against the dollar, thus achieving a quick profit can repay the loan with interest and keep the rest of the profits but the bank refused to grant the loan based on the Bretton Woods We previously reported.
As we have stated the objective of this Convention and earlier of the exchange rate peg is to stabilize the prices of gold currency for international trade and not to any State Ookhvd lifting the price of its currency in order to obtain the benefits of the conversion of currency, into the operations at the export or import.
Overall, the work continues to this Convention in 1944 and until the mid-fifties, where the expansions and the massive developments that have taken place in international trade after the Second World War as well as the heads of funds needed to move from country to country around the world in the reconstruction and the establishment of what had been destroyed by the war crisis , Hzm Kherkat enormous heads of the funds have a great deal of dislocation in the rules and the exchange has been agreed upon in Bretton Woods.
Finally, stop the operation of this convention in the year 1971 gold was no longer a basis for determining the value of the U.S. dollar, and in 1973 became the currencies of major industrialized countries has become more flexible and the main factor for the calculation of value is a factor of supply and demand.
Value of the currency during the period of the seventies changed daily up and down the size of a deliberative and a large, leading to the development of trade exchange in its current form and to the establishment and development of financial and economic tools to confront the new and take advantage of developments in the markets of the world’s largest foreign exchange market, in the eighties and the increased spread of the movement of heads funds with the advent of computers Allalip and techniques associated with it, spread to new areas in Asia, Africa and Latin America and to confirm the continuity of the market, which now includes countries from all continents of the world.
In these days is sufficien to indicate the size of the deployment, which took place in the foreign exchange market to recall that the volume of trading in this market jumped from No. 70 billion dollars a day during the eighties to a 1.5 trillion in 2001, as stated previously.