Charles David97 Carter#64

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What was the 2008 Global Financial Crisis and how did it affect forex?

The 2008 crisis, triggered by the collapse of Lehman Brothers and subprime mortgage defaults, caused global panic. In forex, USD initially weakened due to financial instability but later surged as a safe haven. Currencies like AUD and emerging market FX crashed, while JPY and CHF gained strength. Institutions reduced leverage, central banks slashed interest rates, and coordinated interventions occurred. Lessons: in crises, liquidity and trust in reserve currencies dictate flows more than fundamentals. Retail traders can learn to prioritize capital preservation and avoid overleveraging during systemic shocks. The crisis reshaped forex risk management, making volatility models and stress testing standard.