By devaluing the U.S. dollar against the foreign currencies of its major trade partners, America has made progress in reducing its huge trade deficit – one that hit US$811.5 billion in 2006.

Ever since man began to settle, and civilizations began to rise, trade and commerce have been an integral part of the human experience. In those early days of the agricultural settlement, bartering was the preferred method of exchange. But, at some point coinage and money entered the picture, and reshaped culture from that day forward. Why was it necessary to create money? What was the advantage to having currency?

The London Foreign Exchange market is the largest, along with the New York and Tokyo foreign exchanges, according to a ranking survey from the Bank of International Settlement. The Bank of England, as the central bank, is an integral part of this market and is also the administrator of the UK government’ reserves in foreign currencies.

XE Trade offers easy and transparent online quotes, competitive rates, and free international money transfer options. Plus, our service works seamlessly with your existing bank.

The value of a dollar can be measured in terms of how much that dollar is worth if converted to another currency (a.k.a. the exchange rate). From central banks, to speculative traders, the market participants and their effect on the market is varied and complex. Nonetheless, we will take a look at the market forces that influence exchange rates and by extension, the value of a dollar.