Major Historical & Economical Events Which Impacted Currency Rates

Tim Clayton
Last Edited Jun 03, 2021

As long as people have been using money, economic events have had a major impact on humanity.

History has been shaped by economic disasters, for better or worse. Wars have been started on their account. Conversely, historic events have never failed to impact the regional or global economy. World War 1 left Germany with a bleak economic future, which was a significant factor in the start of World War 2. The Great Depression shaped the 1930s, shaping the future of America and its immigration policies. The economic value of oil has led to war and upheaval in the Middle East and elsewhere.

The currency market, of course, was not left untouched. Every economic and political event, and every crisis, has an impact on the value of a country’s currency.

The following are 12 major historic events that in turn had a significant impact on the modern currency market at the time of occurrence, and had an impact surpassing the rise and fall of speculators and international business foreign exchange transactions. These events have shaped the world as it is today.

These 12 Events & Impact on Currency:

1. Nixon Shock

Gold bars in the Bank - 3D RenderingUp until 1971, major currencies had worked according to the Bretton Woods system. The system was created to stabilise economies during and after the period of the two world wars. It pegged the US dollar to the price of gold and set up fixed exchange rates, using the dollar as a reserve currency.

In 1971, the US under President Nixon unilaterally terminated the agreement. The US dollar became a free-floating currency. Shortly after, the pound sterling followed suit. The Nixon shock changed the face of the currency market forever. With the dollar and pound now floating free, and other currencies following suit, the price of all the major currencies changed drastically.

2. 1973 oil crisis

In 1973, Middle Eastern states placed an embargo on oil trade, in response to the US involvement in Israel’s Yom Kippur War. Unable to trade one of the most important commodities, economies went into crisis.

The 1973 crisis had an important impact on the pound sterling, which went through its own crisis in 1976. Inflation had risen, and markets thought the pound was being overvalued. It almost led to a collapse in the pound, which recovered due to government intervention.

3. Apartheid’s demise

south african flag with handsThe South African rand (ZAR) was valued at $1.40 until 1982. But in the 1980s, the Apartheid system came under increasing pressure. International sanctions began to erode its value at a rapid pace, and by 1985, $1 could buy ZAR2.

The rand’s decline continued with growing uncertainty over South Africa’s future and the rand depreciated to R3.60 to the dollar in 1994.

5. 1997 Asian financial crisis

Financial contagion in 1997 led to fears of an economic meltdown in Asia, which could have in turn led to a worldwide economic meltdown. The crisis started in Thailand, with an accumulation of foreign debt, leading Thailand almost to bankruptcy.

The crisis led to the collapse of the Thai baht. Urgent measures were put in place to save this important currency.

6. The Gulf War

A tank barrelBesides its obvious costs for both Iraq and the US, the Gulf War in 1991 had a significant impact on Iraq’s economy. The UN placed sanctions on the country which had the intended effects on Iraq’s financial system.

One indirect consequence was that Iraq no longer had the Swiss printing method available to print currency. They adopted a new, inferior quality dinar. Due both to sanctions and overprinting by the government, the new notes devalued rapidly. Terror attacks have a lesser impact.

7. The Iraq War

Iraq oilStaying in the Gulf, the Iraq War started by the US in 2003, may have had its own hidden economic cause. A popular theory is that George Bush pushed for the war because Iraq had started trading oil in euros instead of dollars. Iraq was benefiting greatly from this change, but the US economy would suffer.

The currency may have been the leading factor behind the war, which serves as an example of how heavily currency can affect the world.

8. 2011 Japan earthquake

,What effect does a natural disaster have on an economy? What about its currency?

The heavy fallout from the worst earthquake to hit Japan in over a century led to interesting developments in the Japanese economy. While the economy suffered in the short term, the Yen’s status vacillated. Initially, the value fell sharply. Then, with repatriation and insurance from overseas, it surged. The Yen is still today one of the most important currencies in the world.

9. European debt crisis

Bankruptcy - Business Person holding an empty walletThe Eurozone’s biggest crisis came in 2008 and has continued in some states to the present day. Countries had to be bailed out of debt, leading to widespread recession and economic collapse. The fallout led to a range of new regulations being introduced, changing the face of the Eurozone’s financial system.

The euro and some of Europe’s other currencies suffered and consequently fluctuated in the wake of this crisis, and it continues to be a factor in the euro’s value to this day.

10. Greece’s debt crisis

Hangman's noose with money on brown wooden backgroundGreece was one of the hardest-hit nations in the Eurozone crisis. Major austerity measures were introduced and retained for years. Greece’s crisis did not end in 2008 and has continued at a varying severity ever since.

An indirect consequence of Greece’s crisis is surprisingly on the value of the Swiss franc and the property market in 2015. One of the few independent European currencies, the franc is seen as a safe haven, and Greece’s crisis continually drives people to invest in francs.

11. Russian financial crisis

dangerous man in a mask standing near a wall with painted national flag of russiaOne of the most recent ongoing financial crises is the one currently happening in Russia. This one was actually precipitated by the collapse of Russia’s currency – the ruble. Causes for the collapse in the ruble include plummeting oil prices and economic sanctions.

This serves as another example in which external factors such as commodities and politics can lead to major economic mishaps.

12. Brexit Decision – UK/ EU

On June 23 2016, the UK held a referendum to decide whether to they want to leave the EU. The decision was “Leave” with 51% of the votes. While Brexit supporters named June 24 as the UK independence day, the market’s response was harsh. Instantly, the GBPEUR rate has dropped from 1.34 (it hovered around that figure for a week) to 1.24, and continued to drop to 1.17 on June of 2016. 2 years later, it has continued to plummet into the currency GBPEUR rate of 1.13 (true for May 29, 2019). More currencies reacted as per below:

US dollar: Before the Brexit, the GBPUSD was at around 1.49, and it fell to 1.34 immediately, only to slightly recover then further decline to 1.28.

Australian dollar: Before the Brexit, The GBPAUD was at around 1.96 and it fell to 1.82 on June 24, then recover to 1.87 and fell to 1.73.

Canadian dollar: Before the Brexit, the GBPCAD was at around 1.95, and it fell to 1.76, a much steeper decline than the AUD and the USD, it then recovered to 1.8 and fell to 1.67.

LIBOR Rates: View the example section on our LIBOR rate guide.

Here is how other currencies have shifted over the course of these 2 post-Brexit weeks: other currencies have reacted in the same way, but the stock markets demonstrated a completely different behaviour. The FTSE25 and FTSE100 have been drastically hit, which then caused panic across the globe, but in the following 2 weeks the FTSE, DJ, S&P 500 and ASX200 have completely recovered, while the European stock markets did not. The Brexit has the potential of causing a real global recession, and a lot depends on the new trade agreements between the UK and the EU.


As with any history, the purpose of understanding it is to stop it from repeating itself. When it comes to the economy, we need to be wary of the fallout of anticipated events. Oil, for example, is still a major driving factor of economies in the Middle East and throughout the world. One thing that can be guaranteed is that the price of oil will not stay stable. In 2016, commodity prices have been dropping, leading to economic uncertainty.

There is also much to learn from the various recessions that have occurred throughout history. While the Great Depression may seem far away, crises in the ‘90s, ‘00s and ‘10s should serve as warnings of what may come. Some speculate a global recession is on the horizon. We will have to wait and see, and in the meantime prepare, as anything might happen.


More similar posts:

Currency Pegging

What is Currency Pegging and Is It Healthy for the Economy?

Various countries and governments worldwide have been seeking to stabilize their countries’ economies by pegging their domestic currency to a

Economic Indicators

Underrated And Overrated Economic Indicators

Today, we will look at what I think are the three most useless economic indicators that investors and traders should

interest rates

How Does Inflation Impact Interest Rates And Bonds

Inflation, interest rates, and bonds are interconnected financial concepts that play a significant role in any economy. To understand their

trade deficit

Trade Account: How Does it impact currencies?

A fundamental building block of currency valuations Although data can receive little attention for extended periods, trade performance is a


What Is The Libor Rate And How Does It Impact Currency Rates?

The London Interbank Offered Rate (LIBOR) plays a key role in the global currency economy and major historical currency events.

International Invoicing for SME's

International Invoicing for SMEs

The UK’s small and medium enterprises (SMEs) increasingly trade globally. Foreign trade allows them to broaden their reach, create opportunities

Cost of Living in Switzerland Vs UK

Cost of Living in Switzerland Vs UK

The UK and Switzerland are both exceptional countries that offer promising prospects for anyone looking to relocate. However, when it

Cost Of Living In Spain Vs UK

Cost Of Living In Spain Vs UK

When it comes to the cost of living in Spain versus the UK, it’s clear that the Spanish know how

Cost Of Living In New Zealand Vs USA

Cost Of Living In New Zealand Vs USA

Between New Zealand and the United States of America, the cost of living is cheaper by up to 22% in

Cost Of Living In Canada Vs UK

Cost Of Living In Canada Vs UK

Are you thinking about relocating to Canada or the UK and curious how much it will cost to live there?

Cost Of Living In Australia Vs Canada

Cost of Living in Australia Vs Canada

Whether you prefer the Land Down Under or the Great White North, both Australia and Canada offer a high standard

Cost Of Living In Australia Vs UK

Cost Of Living In Australia Vs UK

Australia and the UK offer compelling relocation options owing to their top-notch educational systems, high standards of living, and diverse

cost of living Spain vs USA

Cost Of Living In Spain Vs USA

The United States of America and Spain are among the best places to live in the world, but they are

cost of living France vs USA

Cost Of Living In France Vs USA

France is a treasure mine of history, stunning architecture, and delectable gastronomy. Living there comes at a steep price, which

cost of living australia vs US

Cost Of Living In Australia Vs US

The United States and Australia are two countries on the list of attractive destinations for international migrants. There are several

Cost of Living in Portugal vs USA

Cost of Living in Portugal vs USA

Depending on your personal needs and preferences, living in Portugal or the United States can be a wonderful experience. Although

Cost of living in Colorado vs Texas

Cost of living in Colorado vs Texas

Cowboys and rodeos, delicious food and beer served in generous amounts, and a Wild West heritage — Colorado and Texas

Economic Calendar UK

The table below, detailing the most important economic events that impact the economy and currency rates in 2023, can help

Brexit: Timeline, Impact and Aftermath

It’s January 31, 2023 and it’s been three years since the momentous occasion of Brexit. The United Kingdom’s departure from

Terrorism’s Impact on Economy

When there are terrorist attacks, globally, and they are making headlines , shocking the whole free world, many investors, workers,

Cost of living Florida vs California

Cost of living in Florida vs California

If you love the tropical climate and are keen on living the laidback beach life, you’re probably debating moving to

Cost of Living New Zealand Vs Australia

Cost Of Living In New Zealand Vs Australia

Australia and New Zealand are among the most popular choices for those looking to move to a country with a


Technical Analysis for Beginners

If you understand the fundamentals of foreign exchange rates like economic indicators and wish to be able to do comprehensive

South African Emigration Patterns and Their Impact on the South African Economy

Recently it has become popular for the white population of South Africa to emigrate to other countries. Given that the

Major Historical & Economical Events Which Impacted Currency Rates

As long as people have been using money, economic events have had a major impact on humanity. History has been

Oil Prices Impact on Currency Rates

Oil Prices Impact on Currency Rates and Economy

Changes in oil prices are a vital component for the global economy given the impact on both growth and inflation.

Notify of

Inline Feedbacks
View all comments