Plaza Accord


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Plaza Accord

Agreement among country representatives in 1985 to implement a coordinated program to weaken the dollar.

Plaza Accord

An agreement between the United States, the United Kingdom, West Germany, the United Kingdom, and Japan in 1985 to gradually devalue the U.S. dollar with respect to other currencies. The countries did this by selling dollars from their foreign currency reserves. In the years leading up to 1985 the dollar had become quite strong and was causing significant current account deficits and was making American exports less competitive globally. As a result of the Plaza Accord, the dollar depreciated more than 50% in an orderly fashion over the following two years. Interestingly, the Plaza Accord was the first major currency agreement involving Japan.
References in periodicals archive ?
Eventually the US got together with France, West Germany, Japan and the UK and signed the Plaza Accord, which agreed to depreciate the value of the dollar.
the prospect of an internationally co-ordinated approach to FX reminiscent of the Plaza Accord
The Plaza Accord named for the New York hotel once owned by Trump where negotiators haggled dropped the dollar against the Japanese yen by about 50 percent over the next two years.
The Plaza Accord of 1985 was a joint-agreement between the US, UK, France, West Germany and Japan to depreciate the US dollar relative to the Japanese yen and the Deutsche Mark.
'When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade.' So said US President Ronald Reagan, commenting on Japan after the Plaza Accord was concluded in September 1985.
Even so, the United States continued to run balance of payments deficits and on occasion demanded currency realignments, for example the Plaza Accord 1985 when the Japanese yen was sharply revalued.
In 1985 the Reagan administration pressured Japan and other allies to sign the Plaza Accord, a cooperative effort to weaken the dollar, which was then far more heavily overvalued than it is today.
To understand libra, it's important to realize that it's merely the culmination of a series of economic and monetary events that starts with French Assignats and runs straight through Nixon taking us off the gold standard, the Plaza Accord, and China's entrance into the WTO.
"When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade." So said US president Ronald Reagan, commenting on Japan after the Plaza Accord was concluded in September 1985.
The United States then sought to reduce its trade deficit with Japan; this trade war led to the Plaza accord and the depreciation of the US dollar against the Yen, reducing the competitiveness of Japanese companies (Japan experienced then a speculative bubble and from 1991; after the bubble burst, Japan had to bear a decade of low economic growth, the lost decade).
Consider, for example, what happened after implementation of the 1985 Plaza Accord, which drove up the value of the yen: the U.S.
Consider, for example, what happened after implementation of the 1985 Plaza Accord, which drove up the value of the yen: the US bought less from Japan, but bought more from other countries, causing the overall US trade deficit to remain roughly unchanged.