Plaza Accord

Meeting at New York's Plaza Hotel in September 1985, finance ministers from the US, Japan, West Germany, France and the UK agreed to coordinate intervention to weaken an overvalued dollar, which had made US exports uncompetitive and driven a large trade deficit. The dollar fell roughly 50% against the yen and Deutsche mark over the following two years. In Japan the yen's rapid appreciation squeezed exporters, prompting the Bank of Japan to cut interest rates and flood the economy with cheap credit — a policy response widely credited with inflating the real-estate and stock bubble that collapsed in 1991. The Accord remains a textbook case of coordinated currency intervention among major economies.