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.

BREAKING DOWN '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. Japan ETFs

    A type of exchange-traded fund that invests the majority of its ...
  2. Dollar Rate

    The dollar rate is the exchange rate of a currency against the ...
  3. Order Imbalance

    Order imbalance is a temporary circumstance where the buy or ...
  4. Imbalance of Orders

    Imbalance of orders is when too many orders of a particular type ...
  5. USD/JPY (U.S. Dollar/Japanese Yen) ...

    The abbreviation for the U.S. dollar and Japanese yen cross currency ...
  6. Fiscal Imbalance

    Fiscal imbalance is a situation in which all of the future debt ...
Related Articles
  1. Trading

    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.
  2. Trading

    Did the G20 Agree on a New Plaza Accord in Shanghai?

    Learn all about a possible secret "Plaza Accord" made at the Shanghai G20 meetings to intervene and push the U.S. dollar lower against other currencies.
  3. Insights

    Investors Might Use ICO to Buy NYC's Iconic Plaza Hotel

    Plaza tokens could offer a stake in the iconic hotel of the same name.
  4. Trading

    Volatility In The Yen Has Brought On Big Changes

    There's a difference between translation effects and the real effects that FX swings bring. We look at the difference, and how it's changing Japan.
  5. Trading

    What forex traders need to know about the yen

    The Japanese yen possesses some unique qualities that traders should know before jumping in.
  6. Investing

    Five ETFs To Cash In On Japan’s Rise

    With the election of Shinzo Abe and birth of “Abenomics”, things are looking up for Japan's exporting dependent nation. For investors, Japan may finally be awaking from its doldrums.
  7. Insights

    3 Economic Challenges Japan Faces in 2016

    Understand the important challenges for Shinzo Abe and the Bank of Japan to help Japan's economy escape deflation in the coming year.
  8. Investing

    Jumping for an Old Japan ETF

    This Japan ETF is topping U.S. stocks this year, but it has some drawbacks.
  9. Investing

    FXY: Should You Short the Yen?

    Discover several reasons why investors may profit from short selling the Japanese yen against the U.S. dollar.
  10. Trading

    Why The Yen Is So Strong

    We look at why the yen strengthened after the tsunami and how it impacts the global economy.
RELATED FAQS
  1. What is the relationship between accumulated depreciation and depreciation expense?

    Understand the relationship between accumulated depreciation and depreciation expense. Learn how each one is accounted for ... Read Answer >>
  2. What impact does the balance of trade have on GDP calculations?

    Read about the impact of the balance of trade on a nation's gross domestic product, and why each of these figures can be ... Read Answer >>
  3. What are the different ways to calculate depreciation?

    Read about some of the different allowable methods of calculating depreciation expenses as allowed by generally accepted ... Read Answer >>
  4. What happens to accumulated depreciation when you sell an asset?

    Learn what happens to a company's accumulated depreciation when it sells an asset. Understand why accumulated depreciation ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  3. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  4. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  5. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  6. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
Trading Center