European forex markets

Brief history

European trading block as a whole is the most active foreign exchange markets in the World
and as a consequence play a key role in determining the terms of trade and other factors
affecting international trade. In the late 1990s, the European block increased competition for
foreign markets increasing importance of domestic demand for economic development leading
to the elimination of trade barriers such as tariff the formation of a common market. Since the
formation of the European Union (E.U) most of Europe has thrived with several markets
emerging as power houses in foreign exchange.

Major European forex markets

Since the introduction of the euro as a common currency in the member countries in of the
European Union, the currency has appreciated in value thus helping to boost various economies
of member countries. Nearly a third of forex market trading activities take place in the morning
as the European forex markets open. However, there are still major players within this pool that
generally aid in sustaining the Euro. It should be noted that though Britain still uses its own
currency, the exchange rate of sterling to Euro is essential to the welfare of the union. The
major forex markets in Europe include; the London, Paris, and Berlin. These foreign exchange
markets transact large volume s of business and are practically operational 24 hours a day.

Exchange rates

Currently, there are only two major European currencies trading in the European and other
world foreign exchange markets i.e. the British Sterling pound and the Euro. Due to the healthy
competition between the two currencies, Europe has seen an influx of new business
opportunities that come with having two of the major World currencies in the same continent.
The exchange rates between the two currencies have been relatively stable over the years
although there was a slight dip in the valuation of the Sterling pound in the recent past due to
the 2009/2010 recession.

Role of European forex markets in international trade

Europe occupies the central role in international trade with majority of trade activities being
between European nations and other nations from other continents. Trade majorly takes place
using US dollars, the Sterling pound or the Euro. With two of these currencies hailing from
Europe, any changes in the demand and supply of these currencies has a direct effect on the
volume and quality of international trade. The exchange rate between the pound and the Euro,
the pound and the pound and the dollar as well as the euro and the dollar must be stable/
constant for the operation of international trade. For buyers and sellers requiring pounds or
Euros to complete their transactions in the international market, European foreign exchange
markets become the best place to acquire these currencies.

Conclusion

A study of the European forex markets reveals an increased volume in the number of forex
markets transactions. This not only reveals that Europe is an important market in the World
currently but also reveals that I will become even more important in the future.