What was Forex like before the EUR? Must have been a lot of currency pairs to choose from. I assume very low volatility between the Europian currencies.
It was better.......there were many more jobs for bank forex traders for one thing.....USD/DEM was most volatile and moved more daily ranges were wider I think........as for the crosses they moved less I think, then again it all depended on flows, economics etc etc.........the good old days!!!
Thanks for the reply $$$lover. I'm surprised that Germany would go with the EUR over their own currency. Do you know what mint 20 DEM notes from East and West Germany would be worth? I got them when I visited West and East Berlin in 1988.
Germany was the main proponent behind the EUR. God I miss the old days of USD/DEM and all the crosses. There was alot of volatility in the old EMS crosses. DEM/FF for example. Intraday ranges were alot greater too.
Oh, you're thinking of the good old days... when men were men, women were men, and sheep ran scared. Trading the crosses was fun because of the stability due to the ECU/EMU and the bands that existed. You could actually take on fairly large positions in those european currencies without too much fear because of the stability of the crosses. DMK/CHF was like a rock, with some notable fun exceptions. The guilder is missed. But being a cross trader wasn't where it was at.... Dad told me all about it.
Top is a 20 Deutsche Mark (DM) note from West Germany. Bottom is a 20 Mark (DDM) note from East Germany. I got these in 1988 during my visit to West and East Berlin. When you entered East Berlin you had to exchange 20 West German Deutsche Mark's for 20 East German Mark's. And during exit from East Berlin you could not take the East German Mark's with you and no exhange back to West German Deutsche Mark's. If you didn't spend it you lost it, I smuggled my East German Mark's across Check Point Charlie into West Berlin.
forex-forex>I'm surprised that Germany would go with the EUR over their own currency. Consider General Motors building cars in Detroit and selling them in Chicago. Imagine if Illinois & Michigan each had their own separate currencies. If so, then for each car that GM sold in Chicago, they'd need to 'repatriate' the earnings through ForEx conversions. Next, imagine that a parts supplier for GM is based in Gary, Indiana, and that those shipments need to be paid for in Indiana currency. Further suppose that GM has a sub-assembly plant in Ohio whose UAW workers need to be paid in the currency of that country. Now, take the above absurd hypothetical example and switch the names of U.S. States for European countries, and Daimler-Benz for GM. Start to get the picture? Paying the spreads on each conversion and the bureaucracy of arranging each conversion are not the worst costs. Even worse is trying to handle product-cost-accounting when different conversions happen at different rates at different times. If you've ever had to file a multi-country expense report for extended business trips you get some sense of the hassles created by shifting conversion rates. ugh!!! Prior to Y2K there were about 3 Trillion dollars a day in ForEx volume, with about 90% involving USD, and the builk of the activity transiting through London, with half the volume transacted through Reuters. I forget, but I seem to recall the Euro switchover was 2000. (f___ing stupid time to pick for conversion to coincide with Y2K prep!) Anyways, a year or two after Y2K, the daily ForEx trading volume had dropped to about 2.4 Trillion a day.