Plaza Accord

AAA

DEFINITION of 'Plaza Accord'

A 1985 agreement among the G-5 nations (France, Germany, the United States, the United Kingdom and Japan) to manipulate exchange rates by depreciating the U.S. dollar relative to the Japanese yen and the German Deutsche mark. Also known as the Plaza Agreement, the Plaza Accord's intention was to correct trade imbalances between the U.S. and Germany and the U.S. and Japan, but it only corrected the trade balance with the former.

INVESTOPEDIA EXPLAINS 'Plaza Accord'

The yen and the Deutsche mark dramatically increased in value relative to the dollar. A second agreement, the Louvre Accord, was signed in 1987 to stop the continuing decline of the dollar. An unintended consequence was that the Plaza Accord caused Japan to increase trade and investment with East Asia, making it less dependent on the United States.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. JPY (Japanese Yen)

    The currency abbreviation or the currency symbol for the Japanese ...
  3. Balance Of Trade - BOT

    The difference between a country's imports and its exports. Balance ...
  4. Trade Deficit

    An economic measure of a negative balance of trade in which a ...
  5. Trade Surplus

    An economic measure of a positive balance of trade, where a country's ...
  6. Group of Five - G-5

    Name given to the five industrialized nations that meet periodically ...
Related Articles
  1. Economics

    Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.
  2. Personal Finance

    What Is International Trade?

    Everyone's talking about globalization, so we explain what is it and why some oppose it.
  3. Forex Education

    The Louvre Accord: The Fight Against U.S. Dollar Deflation

    After the Plaza Accord, the U.S. dollar continuously declined. In an effort to put on the brakes, the G6 convened.
  4. Forex Education

    The Plaza Accord: The World Intervenes In Currency Markets

    In 1985, the G-5 nations signed an agreement to devalue the United States currency and correct the GDP. To an extent, it worked. But there were casualties.
  5. Economics

    In Praise Of Trade Deficits

    When a country imports more than it exports, is it a recipe for disaster or just part of a larger cycle?
  6. Economics

    Iron Ore Market: Falling Into The Hands Of A Few

    The big iron ore mining companies have embarked on a drive to increase supply, reduce cost, and take market share.
  7. Trading Strategies

    Know How To Manage Gaps On Your Trading Strategy

    Gaps generate profitable strategies right after they print, as well as during retracements that test those levels, often months or years later.
  8. Forex Strategies

    Understanding Peer-to-Peer Foreign Currency Exchange

    Peer-to-peer (P2P) foreign currency exchange platforms safely connect individuals to swap currencies. With no bank or broker fees, P2P offers significant savings.
  9. Stock Analysis

    What’s The Best Airline Stock In the Industry?

    With many airlines forced to seek bankruptcy protection, Southwest Airlines stands out as having consistently remained profitable throughout its history.
  10. Investing

    Is the Best Plan for Pot Investing 'Wait-and-see?'

    Legalized marijuana is an emerging industry and those interested in investing in it should proceed with caution.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center