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History-Making Events in the Currency Markets

Year: 1985Named after the famous New York hotel where the pact was struck by President Reagan and the leaders of France, West Germany, Japan and United Kingdom, the goal was to devalue the U.S. dollar by massive and coordinated central bank intervention in the currency markets, whereby dollars were sold below market rates to depreciate it against the currencies of the other countries.The accord was the result of a five-year period (1980-1985), which included an economic malaise, when the dollar

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The Plaza Accord-Dollar Devaluation

Year: 1985

Named after the New York hotel where the pact was struck by the United States, France, West Germany, Japan and United Kingdom, the goal was to devalue the U.S. dollar by massive and coordinated central bank intervention in the currency markets, whereby dollars were sold below market rates to depreciate it against the currencies of the other countries.

The accord was the result of the five-year period before 1985, which included an economic malaise, when the dollar surged against the currencies of major U.S. trading partners. The result killed the competitiveness of U.S. industry, crimping exports of tech, auto, and machine products, and sparked calls in Congress for protectionist legislation to slow imports.

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