HISTORICAL EVENTS IN THE FX MARKET

HISTORICAL EVENTS IN THE FX MARKET END OF BRETTON WOODS: FREE MARKET CAPITALISM IS BORN (1971) ____________________________________________________________ On August 15, 1971, it became official: the Bretton Woods system, a system used to fix the value of a currency to the value of gold, was abandoned once and for all. While it had been exorcised before, only to subsequently emerge in a new form, this final eradication of the Bretton Woods system was truly its last stand: no longer would currencies be fixed in value to gold, allowed to fluctuate only in a 1 percent range, but instead their fair valuation could be determined by free market behavior such as trade flows and foreign direct investment. While U.S. President Nixon was confident that the end of the Bretton Woods system would bring about better times for the international econ omy, he was not a believer that the free market could dictate a currency’s true valuation in a fair and catas