Exchange Rate & External Account Management

1717 · 309 years ago

Isaac Newton set a gold-silver ratio that anchored Britain to gold

As Master of the Mint, Newton fixed the price of gold in terms of silver coin at a level that drew silver out of circulation, unintentionally putting Britain on a de facto gold standard for the next two centuries.

1867 · 159 years ago

The Latin Monetary Union fixed exchange rates across five European states

France, Belgium, Italy, Switzerland and later Greece agreed common gold and silver content for their coins, an early attempt at monetary integration that prefigured the fixed-rate and single-currency arrangements of the following century.

1945–67 · 81 years ago

Western European countries maintained fixed exchange rates with the US dollar under Bretton Woods

From the end of the Second World War until 1967, Western European states pegged their currencies to the US dollar under the Bretton Woods system. This institutionalised exchange rate stability across the industrial world for two decades.

15 August 1971 · 55 years ago

The Nixon Shock ended the postwar fixed exchange rate system

On 15 August 1971 President Nixon announced the measures remembered as the Nixon Shock, suspending the dollar's convertibility into gold. This forced major currencies off their fixed parities within two years, ending the dollar-based fixed exchange rate arrangement and replacing nearly three decades of pegged rates with the floating exchange rate system most large economies use today.

early 1980s · 46 years ago

Foreign exchange market convention settled on quoting most pairs to four decimal places

From the early 1980s to 2006 market convention quoted most currency pairs to four decimal places for spot transactions and up to six for forwards and swaps. Currencies valued below 1.000 were quoted to five or six places, and those over 5000 with none.

1980s · 46 years ago

Exchange rate researchers sought alternative equilibrium real exchange rate measures

From the 1980s economists tried to overcome the limitations of existing approaches to measuring equilibrium real exchange rates. This research programme underpinned later tools for judging currency misalignment.

1985 · 41 years ago

The Plaza Accord coordinated a deliberate devaluation of the dollar

Finance ministers from the United States, Japan, West Germany, France and the UK agreed to jointly intervene to weaken an overvalued dollar, a rare instance of coordinated management of major exchange rates by design rather than crisis.

1990s · 36 years ago

Uncovered interest rate parity ceased to hold empirically after the decade

UIRP showed no proof of working after the 1990s. The breakdown weakened a core theoretical tool for predicting exchange rate movements.

1991 · 35 years ago

Argentina pegged the peso one-to-one with the dollar

The Convertibility Plan tied every peso in circulation to a dollar held in reserve, ending hyperinflation almost overnight and winning a decade of price stability before the rigid peg's underlying imbalances brought the system down.

1992 · 34 years ago

The United Kingdom was forced out of the European Exchange Rate Mechanism

Speculative selling overwhelmed the Bank of England's attempt to defend sterling's ERM band despite emergency rate rises, a humiliation that discredited fixed exchange rate pegs among currency speculators for a generation.

1994 · 32 years ago

The CFA franc was devalued by half against the French franc

Fourteen African states in the franc zone accepted a 50 per cent devaluation, the first since the currency's creation, restoring export competitiveness at the cost of a sharp jump in the price of imported goods.

1994 · 32 years ago

China unified its dual exchange rates and pegged the yuan

In 1994 China merged its official and market exchange rates at a single, more competitive level, ending years of a distorted two-tier system, and pegged the yuan renminbi to the US dollar at RMB 8.2768 to $1, a rate held until 2005. The peg is a leading modern example of a state maintaining exchange rate stability by administrative fixing and set the stage for the tightly managed currency regime China has maintained in various forms ever since.

1994 · 32 years ago

Williamson developed the Fundamental Equilibrium Exchange Rate (FEER)

Williamson set out the FEER approach to estimating an equilibrium real exchange rate. It became one of the two most popular frameworks for assessing whether a currency is misaligned.

1997 · 29 years ago

The Asian financial crisis forced a wave of currency collapses across Southeast Asia

Thailand's decision to float the baht after months of speculative attack triggered contagion into Indonesia, South Korea and Malaysia, wiping out years of pegged-rate stability and forcing IMF-led rescue programmes across the region.

• Hong Kong successfully defended its dollar peg

1998 · 28 years ago

Clark and MacDonald first estimated the Behavioural Equilibrium Exchange Rate (BEER)

Clark and MacDonald produced the initial estimation of the BEER measure of equilibrium exchange rates. Alongside FEER it is a standard method for diagnosing over- or undervaluation.

2001 · 25 years ago

Argentina's currency board collapsed after a decade of one-to-one dollar convertibility

Years of an overvalued fixed rate, capital flight and recession forced Argentina to abandon convertibility, default on its debt and devalue sharply, wiping out savings and triggering the worst economic crisis in the country's modern history.

Early 2026 · 6 months ago

The Turkish lira came under renewed pressure despite years of high interest rates

The currency began depreciating again against the dollar and euro even after the central bank had held its policy rate at 50 per cent for much of the previous two years, underlining the limits of monetary tightening alone.

October 2025 · 10 months ago

Argentina's central bank and the US Treasury jointly sold dollars to defend the peso's trading band

The peso touched the top of its 1,000-to-1,400 range just six months after the band took effect, prompting the first coordinated dollar sales under the new regime and raising doubts about whether a band without capital controls could hold under pressure.

August 2025 · last year

Nigeria's naira traded within a narrow spread of the black-market rate

The official exchange rate stood at around 1,537 to the dollar against a parallel-market rate of roughly 1,545 to 1,550, a gap of under 1 per cent marking a striking narrowing after years of a wide and disruptive divergence.

• Governor Yemi Cardoso credited unified market reforms for the narrower spread

April 2025 · last year

Argentina lifted currency controls and let the peso float in a band

The government ended years of strict capital controls and allowed the official peso to trade freely between 1,000 and 1,400 per dollar, part of a new IMF-backed programme; the official and black-market rates converged almost immediately.

• The IMF backed the float with fresh financing

March 2025 · last year

The Turkish lira hit a record low after the arrest of Istanbul's mayor

Markets sold the lira sharply after Ekrem İmamoğlu, President Erdoğan's leading political rival, was detained, a reminder that political shocks could still overwhelm years of high interest rates aimed at restoring currency stability.

• The Central Bank of the Republic of Turkey resisted calls to cut rates to calm markets

February 2025 · last year

Argentina's central bank slowed the pace of peso devaluation as inflation eased

The monthly devaluation built into the exchange rate mechanism was cut from 2 per cent to 1 per cent, a signal that policymakers judged the currency's scheduled slide had begun to outpace the underlying fall in inflation.

2025 · last year

Japan's finance ministry kept open the threat of currency intervention

Officials repeated warnings against rapid, one-sided yen moves as the currency periodically weakened past 150 to the dollar, keeping alive the possibility of the kind of dollar-selling intervention used in previous bouts of pressure.

2025 · last year

China's central bank kept the yuan inside a tightly managed band

The People's Bank of China continued setting a daily reference rate that limited the currency's movement even as trade tensions with the United States and a weaker property sector added pressure toward capital outflows, prioritising stability over a market-set rate.

2025 · last year

The Kenyan shilling held its gains from a strong 2024 rebound

Having recovered sharply after a 2024 Eurobond buyback eased default fears, the shilling traded far more calmly through the following year than in the preceding crisis period, a rare case of an African currency stabilising rather than sliding.

2025 · last year

The Egyptian pound continued trading near 40 to the dollar

The currency held broadly around the level it reached after the central bank abandoned its dollar peg and let the pound float, a sharp change from the fixed rate of about 16 to the dollar maintained between 2018 and 2021.

September 2019 · 7 years ago

Argentina again restricted the ability to buy US dollars

Argentina reimposed limits on dollar purchases in September 2019. The reversal illustrates recurring reliance on administrative controls to defend a currency's value.

2016 · 10 years ago

Retail foreign exchange trading reached 5.5% of the foreign exchange market

As of 2016 retail foreign exchange trading was reported at 5.5% of the whole market, some $282 billion in daily turnover. The figure marks the scale reached by non-institutional participation in currency markets.

2015 · 11 years ago

Mauricio Macri campaigned on lifting Argentina's capital controls

Macri promised to remove the exchange restrictions imposed by the preceding government, including capital controls used to manage instability. The pledge made exchange rate policy an explicit electoral issue.

2011 · 15 years ago

Government of Cristina Fernández de Kirchner restricted purchases of dollars in Argentina

Argentina's government limited the ability to buy US dollars, a capital control intended to manage economic instability. The measure fuelled a black market in dollar purchases.

2005 · 21 years ago

Barclays Capital broke convention by quoting spot rates to five or six decimal places

Barclays Capital began quoting spot exchange rates with five or six decimal places on its electronic dealing platform. This departed from the long-standing four-decimal market convention for spot quotation.