The German mark, the Japanese yen, sterling (British pound) and the Swiss franc have been the basic currency of a lot of trading transactions. Each of these markets has very distinct features.

The German mark has been replaced by the Euro. The German mark was a tower of strength. The traditional role of the Bundesbank was undermined after unification with the former East Germany and it has now been replaced by the European central bank.

The Japanese yen has been highly changible in recent years. In October 1998, the most dramatic currency move in many years was seen as the dollar fell some 15% in just a few days against the Japanese yen.

The Swiss franc serves as does the dollar from time to time, as a "safe haven". This is due to the isolation of the Swiss economy, its independent and neutral political acts and the secrecy of Switzerland's banking system.

The British pound, always a big part of foreign exchange markets and the first currency to be Forex market traded actively against the US dollar via the transatlantic cables (hence the description "cable"), has traditionally weakened against most other currencies. This tendency has been reversed in recent years and the pound will remain an interesting currency as it takes its place as one of the few key European currencies.

European Currencies

European currencies have gained in importance in the last twenty years and have suffered some major crises due to the continued attempt to peg exchange rates to each other. The key to Continental European currencies has been the German mark-French franc Axis that was seen as the backbone of the common currency. The Benelux countries have benefited from long-term stability as well, whereas most Mediterranean and Scandinavian currencies have fluctuated wildly against this European core. The introduction of a common currency in 2001 attracts big changes to foreign exchange trading in Europe. As early as 1998, the participating currencies were fixed against each other and this has forced many European banks to revise many of their trading assets. Overall, however, we do not consider the introduction of the Euro to be particularly detrimental to foreign exchange markets. A feeble Euro has taken the place of the mark and non-participating European currencies will become more inconstant and more exposed to speculative attacks. This will spell a new dawn for sterling trading that will become the main national currency market (together with the Swiss franc) in Europe.

Visit us at: www.forexgen.com