Currency For Trade And Currency Trading

7
Jul0

Money is but a symbol to which we have given a value. It represents the value of goods and services. Before money was invented, products and services were exchanged directly. This exchange was called barter. You sell a good to a person who has a good that you need. This means of transaction was cumbersome. Money became the medium through which business and trade was transacted. When you sell a good you get money in return with which you can buy what you need. It made trade and exchange of products much easier. Money underwent change in its forms through history, from coins made of precious metals such as gold, silver and copper to bank notes or currency. Now digital money or virtual currency is also being used as a medium of transactions.

It was in China in the mid 13^th century who introduced paper money first. Sweden was the first country in Europe to introduce paper money in 1661. Sweden depended on copper coins which had a lower real value unlike other precious metals. As a result, they had to introduce coins that were heavier to denote higher value. This was unmanageable. Paper money was attractive to introduce as it was easy to carry with you as well as to produce. The hard money with inherent real value was soon replaced by paper money. In order to give paper money the value, the paper money was backed by precious metal which the government kept acquiring and storing. Most industrialized nations backed currency with gold standard by 1990. Since then gold was de-linked from paper money and instead they became the legal tender by government decree.

Foreign exchange market or the forex market was the place where currencies were traded with each other. Governments, banks, currency traders, financial institutions, money managers and speculators bought and sold currencies in the forex market. In the 1970s, the forex market became established as an organized economic activity globally. In 1971 the fixed exchange rate between any pair of currency was soon replaced with the floating exchange rate. The forex market has a turn over of US$4 trillion per day. The forex market has been rapidly expanding. For those who want to learn about the forex market there are many learning tools in the market such as London Forex Rush System , Forex Trading Made E-Z and Learn Forex Live.

Increase in production, employment and business in a country increases the demand for the currency of that country. When exports become more in a country, the demand for its currency increases. The forex market serves the need for currencies.