Major Forex Currencies and Their Short History
Currency names vary from country to country based on domestic culture and linguistic factors. Many monetary units got their name from the domestic word for ‘weight’ or the word for ‘golden’. This was happening probably because these domestic currencies had an equal value of their weight in gold.
The Modern History of Currency Trading
Modern currency trading started in 1973, after the end of the Bretton Woods system. On August 15, 1971, President Nixon announced a ‘New Economic Policy’ that was the beginning of the end for the Bretton Woods agreement that was established at the end of World War II.
The Bretton Woods system (1944-1971)
The Bretton Woods system tightly regulated all exchange rates by linking them to their gold reserves. More specifically, all participating countries guaranteed the convertibility of their currencies into U.S. dollars to within 1% of fixed parity rates, with the dollar convertible to gold bullion for foreign governments and central banks at US$35 per troy ounce of fine gold.
In August 1971, the United States "temporarily" suspended the convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency.
By 1975 the IMM (International Monetary Market) was allowing anyone to trade currencies.
Ancient History of World's Currencies (Internationally Accepted)
Gold has been the global currency since the dawn of time. The Athenian silver drachma, coined in the 5th century B.C. is probably the first currency that became widely accepted, outside its issuing state. After Alexander the Great's conquests (336 BC – 323 BC), the name drachma was used in many of the Hellenistic kingdoms in the Middle East. The Greek Drachma was followed by the Roman Gold Aureus and Silver Denarius. The Athenian Drachma and the Roman Denarius circulated simultaneously for some time. The dominance of Roman currency was brought to an end because of the extreme inflation during the early 4th century A.D.. As the Western Roman Empire was falling, the Byzantine currency (named Gold Solidus) became the dominant currency worldwide in the 6th century A.D., and afterward. The Islamic Dinar became the next global currency during the next couple of centuries, although the Solidus and Islamic Dinar continued to circulate simultaneously for some time.
By the 13th century, Florence Fiorino became dominant in the Mediterranean, and by the 15th century the Venice Ducato. In the 17th and early 18th centuries, the dominant international currency was the Dutch Guilder issued by the Netherlands. In the 19th century and until World War 2 the British Pound Sterling became the world’s dominant currency. In early 1900, 60% of the total global trade was invoiced in British Sterling. After WW2, and ever since the US Dollar has been the global dominant monetary unit.
Origins of World Dominant Currencies
-
Gold
The name of Gold has Gothic / German roots (gulþa). The word Gulþa later evolved in the Old English language into Geolu, which means "yellow". The word Gold came into existence in the twelfth century.
-Gold was first smelted in ancient Egypt in 3600 BC
-The first gold coins were created in Lydia, Asia Minor in 600 BC
-
Dollar
According to OxfordWords, the German word "joachimsthal" referred to Joachim's valley where silver was once mined. Coins minted from this mine became "joachimsthaler," which was later shortened to "thaler" and eventually morphed into "dollar."
-The dollar was chosen to become the monetary unit for the United States of America in 1785
-Australia, New Zealand, Canada, Fiji, and Singapore also use their dollars
-
Euro
The European Euro is named after Europa (Europe). Europa in Greek mythology was a Cretan queen. The etymology of the name Euro in Greek means wide {εὐρύς / eurys}."
-The eurozone consists of 19 countries: Germany, France, Italy, Spain, Greece, Netherlands, Austria, Belgium, Portugal, Ireland, Cyprus, Estonia, Finland, Latvia, Lithuania, Malta, Slovakia, Slovenia, and Luxembourg
-The European Union introduced the euro on January 1, 1999
-
British Pound Sterling
The British pound is derived from the Latin word "Poundus" meaning weight.
-The pound is the official currency of the United Kingdom, the Isle of Man, Gibraltar, Jersey, Guernsey, South Georgia and the South Sandwich Islands, the British Antarctic Territory, and Tristan da Cunha
-The British Sterling is the fourth most-traded currency in the Forex market
-Egypt, Lebanon, South Sudan, Sudan, and Syria all call also their currency pounds
-
Chinese Yuan, Japanese Yen, and Korean Won
The Chinese Yuan means "round" or "round coin". This word is found in the names of many Asian currencies such as the Chinese Yuan, Japanese Yen, and the Korean Won.
-The Japanese Yen is the third most-traded currency in the Forex market
-
Mexican Pesos
The peso means "weight" in Spanish.
-
Italian and Turkish Liras
The Italian and Turkish "lira" name is derived from the Latin word "libra" which means "pound."
-
German Mark
The Deutsche mark and the Finnish markka took their names from units of weight.
-
Iranian Rial
The Latin word "regalis" meaning "royal," is the origin of the Omani and Iranian "rial." Similarly, Qatar, Saudi Arabia, and Yemen all use a currency called the"riyal." Before the euro, Spain used "reals" as well.
-
Russian Ruble
Russia's and Belarus' rubles are named after a measure of weight for silver.
-
South African Rand
South Africa's rand comes from the Dutch name for the South African city "Witwatersrand," an area rich in gold mining.
-
Scandinavian Crowns
Many Scandinavian countries use a currency that derives from the Latin word "corona" meaning "crown."
-
Dinars
Jordan, Algeria, Serbia, and Kuwaiti all call their currency the "dinar."
-Dinar comes from the Latin word "denarius," which was a Roman silver coin (check below)
-
India’s and Pakistan’s Rupees
The Sanskrit word for wrought silver is "rupya," which named the Indian and Pakistani rupee, and Indonesia's rupiah.
-
Dutch Guilder
The Dutch name gulden was a Middle Dutch adjective meaning "golden", and the name indicates a coin that was originally made of gold.
-
Polish Zloty
"Zloty" is the Polish word meaning "golden."
-
Hungarian Forint
The Hungarian forint comes from the Italian "fiorino," a gold coin from Florence.
■ World's Currencies and their History
CurrenciesFx.com (c)
Sources: OxfordWords, BusinessInsider, Wikipedia
> READ MORE