Konkuk University professor Oh Jung-geun said Korea may follow in the footsteps of Japan which suffered two lost decades due to a strong yen following the 1985 Plaza Agreement
That initiative paid immediate dividends when the first oil shock hit a few months later and begat historic episodes of international cooperation such as the Plaza Agreement
a decade later.
Fears that usual "beggar-thy-neighbor policies" may escalate further have raised the debate that the G-20 may agree shortly on a new currency accord, similar to the one the Group of Five reached in September 1985 to weaken the US dollar (the Plaza Agreement
The dollar plunge was the steepest since the Plaza Agreement
It wouldn't be surprising if Baker--master orchestrator of the Plaza agreement
and the Madrid conference--finds it compelling.
Leaving aside the Smithsonian flirtation in 1973 with a new set of fixed rates, which proved short-lived, the other main examples of currency intervention were the Plaza agreement
of 1985 and the Louvre accord of 1987.
Bankers still remember the Plaza agreement
The discussion then reverted to the question of intervention as a means of influencing the exchange rate, with the suggestion that it would be valuable to have further comments from Lord Lawson on the effectiveness of intervention with particular reference to the Plaza Agreement
in 1985 at which the major industrial countries agreed to intervene to reduc e the US dollar exchange rate.
But the Plaza Agreement
, enacted in 1985, changed the whole picture.
They concluded that "substantial exchange rate changes since the Plaza Agreement
will increasingly contribute to reducing external imbalances and have now brought their currencies within ranges broadly consistent with underlying economic fundamentals." In addition, they expressed concern that "further substantial exchange rate shifts could damage growth and adjustment prospects in their countries." Therefore, they agreed to "cooperate closely to foster stability of exchange rates around current levels." In this regard, the G-7 authorities reached certain general understandings about the tolerable range of fluctuations in exchange rates for the dollar and about cooperation in exchange market operations.
Since the Plaza Agreement
of September 1985, the exchange rates of the major industrial countries have changed dramatically.
In 1984, the United States initiated the Plaza agreement
to knock the dollar down.