oussama94
05-28-2017, 19:41
The effects of the multilateral intervention were seen immediately, and
within two years the dollar had fallen 46 percent and 50 percent against the
deutsche mark (DEM) and the Japanese yen (JPY), respectively. Figure 2.1
shows this depreciation of the U.S. dollar against the DEM and the JPY. The
U.S. economy became far more export-oriented as a result, while other industrial
countries like Germany and Japan assumed the role of importing.
This gradually resolved the current account deficits for the time being, and
also ensured that protectionist policies were minimal and nonthreatening.
But perhaps most importantly, the Plaza Accord cemented the role of the
central banks in regulating exchange rate movement: yes, the rates would
not be fixed, and hence would be determined primarily by supply and demand;
but ultimately, such an invisible hand is insufficient, and it was the
right and responsibility of the world’s central banks to intervene on behalf
of the international economy when necessary
within two years the dollar had fallen 46 percent and 50 percent against the
deutsche mark (DEM) and the Japanese yen (JPY), respectively. Figure 2.1
shows this depreciation of the U.S. dollar against the DEM and the JPY. The
U.S. economy became far more export-oriented as a result, while other industrial
countries like Germany and Japan assumed the role of importing.
This gradually resolved the current account deficits for the time being, and
also ensured that protectionist policies were minimal and nonthreatening.
But perhaps most importantly, the Plaza Accord cemented the role of the
central banks in regulating exchange rate movement: yes, the rates would
not be fixed, and hence would be determined primarily by supply and demand;
but ultimately, such an invisible hand is insufficient, and it was the
right and responsibility of the world’s central banks to intervene on behalf
of the international economy when necessary