Plaza Accord

The Plaza Accord was an agreement signed on September 22, 1985 at the Plaza Hotel in New York City between France, West Germany, Japan, the United Kingdom and the United States to jointly intervene in currency markets and deliberately depreciate the US dollar, which had appreciated roughly 50 percent against major currencies since 1980. The dollar fell about 4 percent immediately after the announcement and continued declining over the following two years, helping narrow the American trade deficit with Western Europe, though it did little to close the larger deficit with Japan because of structural trade barriers. The accord's yen appreciation triggered Japan's endaka recession and prompted the Bank of Japan's subsequent monetary easing, a policy response widely credited with helping inflate the Japanese asset price bubble of the late 1980s. It was superseded by the 1987 Louvre Accord, which halted further coordinated dollar depreciation.