Investing in forex is not a modern development. The foreign exchange market has been around for a long time in different forms from the traders or money changers from the Far East who traded using coins to the ancient traders of Babylon who utilized paper money. In its present form, the foreign exchange market started operation in nineteen seventy three. It has gone through many revisions and matured. The market as used presently follows after the free floating system which allows currency to move freely, permitting the possibility for speculation. This makes the forces of demand and supplies one of the most important determinants of currency price. The apex banks do come in once in a while with policies to stabilize the national currency but these are temporary.
A BRIEF HISTORY OF FINANCIAL MARKETS
The financial markets evolved quite naturally when merchants tried to manage debt on behalf of the banks. These were agricultural debts. Soon they also started trading securities, and then companies started offering shares.
TYPES OF FINANCIAL MARKETS
There are a variety of financial markets I our complex economy. Each occupying a particular niche as it serves it audience. None can be said to be less important than THE OTHER as they are solving real economic needs. Since as early as the twelve century when the stock market evolved, other markets have been given birth to. A list of financial markets is given below.
- THE STOCK
The stock market has been the main driver of the economy as it is one of the best ways that business raise money. There is always need for companies to expand or increase production capacity, the stock market allow this by permitting the borrowing of capital from the general public through the selling of shares.
- THE BOND MARKET
Bonds are financial instrument s that is not well understood. Essentially they refer to debts; it is an instrument that shows that the issuer owes the owner a debt which is promised to be repaid on a future date. It has been used to raise capital by government and corporations.
THE FOREIGN EXCHANGE MARKET
This is ne finical market that has seen a lot of activities in it young history. The forex market is one of the youngest but by far the largest financial market all over the world. It is so vast that in a stock exchange as large as the New York stock exchange, it will need three months of active trading to equal the volume of trade in one day of trading at the forex market. There are so many things that set the forex market apart from other financial market. One of these is the fact that it runs twenty four hours, also, it is not tied to any particular stock exchange and as such it is referred to as an over the counter (OTC) market. The success of this market stem from the interdependence of the global economy where no country produces all it need.
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