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Plaza Accord of 1985 Leads to Dollar Depreciation
Plaza Accord of 1985 Leads to Dollar Depreciation
Published: 2007/08/11
Channel: danieljbmitchell
The Japanese Economy and the Uninteded Consequences of the Plaza Accord
The Japanese Economy and the Uninteded Consequences of the Plaza Accord
Published: 2016/05/25
Channel: maneco64
Plaza Accord
Plaza Accord
Published: 2012/11/01
Channel: Christopher Hunt
Why was the plaza accord unique?
Why was the plaza accord unique?
Published: 2016/01/25
Channel: nipfpmf
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 1
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 1
Published: 2015/10/05
Channel: BakerInstitute
the Plaza Accord and the IMF
the Plaza Accord and the IMF's SDRs
Published: 2010/06/13
Channel: Marc Chabot YT
Understanding the Japanese Economy (Art and Finance Vlog #1)
Understanding the Japanese Economy (Art and Finance Vlog #1)
Published: 2015/02/24
Channel: Art and Finance
car stereo plaza accord part 1
car stereo plaza accord part 1
Published: 2011/10/02
Channel: MrDamian87b
New Plaza-Accord at G7 coming? CMC Markets 25th May 2016
New Plaza-Accord at G7 coming? CMC Markets 25th May 2016
Published: 2016/05/25
Channel: CMC Markets plc
Why I Stopped Shopping At H&M
Why I Stopped Shopping At H&M
Published: 2017/03/22
Channel: Kristen Leo
Plaza & JAL in 1985 ①/2 : Plaza Accord
Plaza & JAL in 1985 ①/2 : Plaza Accord
Published: 2017/02/09
Channel: Riding BACK
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 5
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 5
Published: 2015/10/05
Channel: BakerInstitute
The Plaza at 30: Introduction and Conversation with Lawrence H. Summers
The Plaza at 30: Introduction and Conversation with Lawrence H. Summers
Published: 2016/04/07
Channel: PetersonInstitute
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 4
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 4
Published: 2015/10/05
Channel: BakerInstitute
Erik Townsend: Stronger US Dollar May Require Global Central Bankers to Reset Financial System
Erik Townsend: Stronger US Dollar May Require Global Central Bankers to Reset Financial System
Published: 2017/01/07
Channel: WallStForMainSt
Parliamentary Exceptions - 18 18 Crowne Plaza Accord
Parliamentary Exceptions - 18 18 Crowne Plaza Accord
Published: 2016/09/22
Channel: Lou Francis
The Plaza at 30: Panel 1: How Successful Was Plaza?
The Plaza at 30: Panel 1: How Successful Was Plaza?
Published: 2016/04/07
Channel: PetersonInstitute
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 3
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 3
Published: 2015/11/19
Channel: BakerInstitute
That Plaza Hotel where that Plaza Accord was done in Sept 1985
That Plaza Hotel where that Plaza Accord was done in Sept 1985
Published: 2014/11/02
Channel: Ecrivain Nick
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 2
Currency Policy Then and Now: 30th Anniversary of the Plaza Accord 2
Published: 2015/10/05
Channel: BakerInstitute
Global Imbalance and China Revisited: Yen and Yuan; Another Plaza Accord
Global Imbalance and China Revisited: Yen and Yuan; Another Plaza Accord
Published: 2013/02/01
Channel: aaaricuny
HIN cirebon 2017 Living Plaza - honda accord 2003
HIN cirebon 2017 Living Plaza - honda accord 2003
Published: 2017/05/28
Channel: Hendra 96
car stereo plaza accord part 2
car stereo plaza accord part 2
Published: 2011/10/05
Channel: MrDamian87b
플라자 합의 Plaza Accord
플라자 합의 Plaza Accord
Published: 2016/06/27
Channel: joeki loe
【Conspiracy : JAL123 in 1985】 ③/3 Plaza Accord & TRON (cc Sub)
【Conspiracy : JAL123 in 1985】 ③/3 Plaza Accord & TRON (cc Sub)
Published: 2017/08/01
Channel: WHETE DOG
Poradnik HondaPlazaTV- #5 parowanie zestawu bluetooth Accord / Civic / Legend / CR-Z
Poradnik HondaPlazaTV- #5 parowanie zestawu bluetooth Accord / Civic / Legend / CR-Z
Published: 2016/02/05
Channel: Honda Plaza TV
Vers un accord du Plaza 2.0 ?
Vers un accord du Plaza 2.0 ?
Published: 2017/01/13
Channel: Natixis Asset Management
RX8 x Accord Plaza Feature
RX8 x Accord Plaza Feature
Published: 2017/06/24
Channel: K.O. Productions
The Plaza at 30: Panel 2: Time for a New Plaza?
The Plaza at 30: Panel 2: Time for a New Plaza?
Published: 2016/04/07
Channel: PetersonInstitute
Brazil
Brazil's Mantega Says G-20 Can Agree on Currency Accord: Video
Published: 2012/03/23
Channel: Bloomberg
2013 Honda  Accord - Plaza Auto Center
2013 Honda Accord - Plaza Auto Center
Published: 2017/08/29
Channel: Goxee Dealer
2015 Honda Accord vs. Ford Taurus
2015 Honda Accord vs. Ford Taurus
Published: 2015/09/02
Channel: Rolling Hills Auto Plaza
2013 Honda  Accord - Plaza Auto Center
2013 Honda Accord - Plaza Auto Center
Published: 2017/09/08
Channel: Goxee Dealer
2003 Honda  Accord LX - Auto Plaza Palm Desert
2003 Honda Accord LX - Auto Plaza Palm Desert
Published: 2017/05/03
Channel: Goxee Dealer
Are Stocks Vulnerable to Disruption?
Are Stocks Vulnerable to Disruption?
Published: 2017/05/01
Channel: OptionsTips
2009 Honda Accord - Brooklyn NY
2009 Honda Accord - Brooklyn NY
Published: 2011/09/30
Channel: PlazaAutoMall10
Is Our Trade Deficit a Problem? Foreign Exchange Reserves, Money Markets, Forex (2005)
Is Our Trade Deficit a Problem? Foreign Exchange Reserves, Money Markets, Forex (2005)
Published: 2014/08/30
Channel: Way Back
Marc Chandler @marcmakingsense: Carry Trade Unwind
Marc Chandler @marcmakingsense: Carry Trade Unwind
Published: 2016/02/03
Channel: FXStreet
2014 Honda  Accord - Plaza Auto Center
2014 Honda Accord - Plaza Auto Center
Published: 2017/04/28
Channel: Goxee Dealer
USED 2012 Honda ACCORD SE at Plaza Lexus Used #CA008798
USED 2012 Honda ACCORD SE at Plaza Lexus Used #CA008798
Published: 2017/10/16
Channel: Plaza Lexus
Christopher Lemieux @Lemieux_26: U.S. Entering Recession
Christopher Lemieux @Lemieux_26: U.S. Entering Recession
Published: 2016/01/21
Channel: FXStreet
Historia del Forex - 5 de 8 - Acuerdos del Hotel Plaza y la devaluacion del Dólar
Historia del Forex - 5 de 8 - Acuerdos del Hotel Plaza y la devaluacion del Dólar
Published: 2012/09/03
Channel: TradingUnited
A New Era of Economic (Un)Cooperation
A New Era of Economic (Un)Cooperation
Published: 2017/03/21
Channel: City National Bank
Poradnik HondaPlazaTV- #3 aktualizacja map (nawigacji) w Honda Connect+
Poradnik HondaPlazaTV- #3 aktualizacja map (nawigacji) w Honda Connect+
Published: 2016/01/31
Channel: Honda Plaza TV
2005 Honda  Accord - Auto Plaza Palm Desert
2005 Honda Accord - Auto Plaza Palm Desert
Published: 2017/05/11
Channel: Goxee Dealer
郭兆明博士 - 通識 - 貨幣遊戲(2)
郭兆明博士 - 通識 - 貨幣遊戲(2)
Published: 2014/11/17
Channel: shun944
2010 Honda  Accord - Plaza Auto Center
2010 Honda Accord - Plaza Auto Center
Published: 2017/07/19
Channel: Goxee Dealer
Ultimate Alliance: The History of U.S.-Japan Economic Relations since 1945
Ultimate Alliance: The History of U.S.-Japan Economic Relations since 1945
Published: 2016/12/05
Channel: JapanSocietyNYC
2003 Honda Accord available from Auto Plaza, Inc.
2003 Honda Accord available from Auto Plaza, Inc.
Published: 2011/01/06
Channel: AutoPlazaInc
2012 Honda Accord LX sedan AT | Rolling Hills Auto Plaza
2012 Honda Accord LX sedan AT | Rolling Hills Auto Plaza
Published: 2016/05/05
Channel: Rolling Hills Auto Plaza
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WIKIPEDIA ARTICLE

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The 1985 "Plaza Accord" is named after New York City's Plaza Hotel, which was the location of a meeting of finance ministers who reached an agreement about managing the fluctuating value of the US dollar. From left are Gerhard Stoltenberg of West Germany, Pierre Bérégovoy of France, James A. Baker III of the United States, Nigel Lawson of Britain, and Noboru Takeshita of Japan.

The Plaza Accord or Plaza Agreement was an agreement between the governments of France, West Germany, Japan, the United States, and the United Kingdom, to depreciate the U.S. dollar in relation to the Japanese yen and German Deutsche Mark by intervening in currency markets. The five governments signed the accord on September 22, 1985 at the Plaza Hotel in New York City.

Background[edit]

Between 1980 and 1985 the dollar had appreciated by about 50% against the Japanese yen, Deutsche Mark, French Franc and British pound, the currencies of the next four biggest economies at the time.[1] This caused considerable difficulties for American industry but at first their lobbying was largely ignored by government. The financial sector was able to profit from the rising dollar, and a depreciation would have run counter to Ronald Reagan's administration's plans for bringing down inflation. A broad alliance of manufacturers, service providers, and farmers responded by running an increasingly high-profile campaign asking for protection against foreign competition.

Major players included grain exporters, car producers, engineering companies like Caterpillar Inc., as well as high-tech companies including IBM and Motorola. By 1985, their campaign had acquired sufficient traction for Congress to begin considering passing protectionist laws. The prospect of trade restrictions spurred the White House to begin the negotiations that led to the Plaza Accord.[2][3]

The justification for the dollar's devaluation was twofold: to reduce the U.S. current account deficit, which had reached 3.5% of the GDP, and to help the U.S. economy to emerge from a serious recession that began in the early 1980s. The U.S. Federal Reserve System under Paul Volcker had halted the stagflation crisis of the 1970s by raising interest rates, but this resulted in the dollar becoming overvalued to the extent that it made industry in the U.S. (particularly the automobile industry) less competitive in the global market.

Effects[edit]

Devaluing the dollar made U.S. exports cheaper to purchase for its trading partners, which in turn allegedly meant that other countries would buy more American-made goods and services.

The exchange rate value of the dollar versus the yen declined by 51% from 1985 to 1987. Most of this devaluation was due to the $10 billion spent by the participating central banks.[citation needed] Currency speculation caused the dollar to continue its fall after the end of coordinated interventions. Unlike some similar financial crises, such as the Mexican and the Argentine financial crises of 1994 and 2001 respectively, this devaluation was planned, done in an orderly, pre-announced manner and did not lead to financial panic in the world markets. The Plaza Accord was successful in reducing the U.S. trade deficit with Western European nations but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan. This deficit was due to structural conditions that were insensitive to monetary policy, specifically trade conditions. The manufactured goods of the United States became more competitive in the exports market but were still largely unable to succeed in the Japanese domestic market due to Japan's structural restrictions on imports. The Louvre Accord would be signed in 1987 to halt the continuing decline of the U.S. dollar.

The signing of the Plaza Accord was significant in that it reflected Japan's emergence as a real player in managing the international monetary system. However, the recessionary effects of the strengthened yen in Japan's export-dependent economy created an incentive for the expansionary monetary policies that led to the Japanese asset price bubble of the late 1980s.[citation needed] It is thus postulated[4] that Plaza Accord contributed to the Japanese asset price bubble, which progressed into a protracted period of deflation and low growth in Japan known as the Lost Decade.

See also[edit]

References[edit]

  1. ^ Brook, A, F Sedillot and P Ollivaud (2004). "Channel 1: Exchange Rate Adjustment". OECD Economics Working Paper 390 - "Channels for Narrowing the US Current Account Deficit and Implications for Other Economies" (online ed.). Oxford; New York: OECD. p. 8, figure 3. doi:10.1787/263550547141. 
  2. ^ Michael J. Hiscox (2005). "The Domestic Sources of Foreign Economic Policies". In John Ravenhill. Global Political Economy (First ed.). Oxford; New York: Oxford University Press. p. 65. ISBN 0-19-926584-4. OCLC 60383498. 
  3. ^ I. M. Destler; C. Randall Henning (1993). Dollar Politics: Exchange Rate Policymaking in the United States. Institute for International Economics. pp. 105–130. ISBN 0-19-926584-4. 
  4. ^ "China seeks to learn from mistakes of 1985 Plaza Accord". The Japan Times. 9 September 2006. Archived from the original on 28 January 2012. Retrieved 27 September 2011. 

External links[edit]

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