<p>The Plaza Accord was implemented through market mechanisms. According to <a href="https://en.wikipedia.org/wiki/Plaza_Accord" rel="nofollow">Wikipedia</a> Central banks of the signatory nations spent $10 billion dollars. They exchanged these dollars for other currencies. This increases the supply of dollars and may even decrease demand if so far the central banks have been purchasing dollars. Due to the higher supply and not higher demand the 'price' or exchange rate of the dollar fell. At the same time the countries also implemented policy changes. This would effect the mid to long term exchange rates.</p>

<p>The Japanese interest rate did indeed fall. <br> 
<a href="http://www.tradingeconomics.com/japan/interest-rate" rel="nofollow">http://www.tradingeconomics.com/japan/interest-rate</a>
<br> Mind though that the US interest rate also fell <br> 
<a href="http://www.tradingeconomics.com/united-states/interest-rate" rel="nofollow">http://www.tradingeconomics.com/united-states/interest-rate</a></p>

CC BY-SA 3.0
2015-06-19T08:18:52.593Z
2015-06-19T08:18:52.593Z
Giskard
<p>In September 1985, Japan, the US, and three other nations agreed to the "<a href="https://en.wikipedia.org/wiki/Plaza_Accord" rel="nofollow">Plaza Accord</a>," which appreciated the Yen and Deutsche Mark. The value of the Japanese Yen appreciated from 200 Yen per Dollar to 100 Yen per Dollar.</p>

<p>How was this implemented? What of the free market? Did interest rates in Japan double? What are the mechanics by which an external intervention like this is made to hold in the "free" market (especially the FX market which is renowned for being so liquid and so "free").</p>

<p>Thanks</p>

<macroeconomics><exchange-rates><currency-peg>
How did the Plaza Accord revalue the Japanese Yen?
Kiers
# How did the Plaza Accord revalue the Japanese Yen?

(Asked by: username_0 on 2015-06-19)

In September 1985, Japan, the US, and three other nations agreed to the "[Plaza Accord](https://en.wikipedia.org/wiki/Plaza_Accord)," which appreciated the Yen and Deutsche Mark. The value of the Japanese Yen appreciated from 200 Yen per Dollar to 100 Yen per Dollar.

How was this implemented? What of the free market? Did interest rates in Japan double? What are the mechanics by which an external intervention like this is made to hold in the "free" market (especially the FX market which is renowned for being so liquid and so "free").

Thanks

**Tags:** macroeconomics, exchange-rates, currency-peg

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## 1 answers

### Answer by username_1 on 2015-06-19. Score: 2

The Plaza Accord was implemented through market mechanisms. According to [Wikipedia](https://en.wikipedia.org/wiki/Plaza_Accord) Central banks of the signatory nations spent $10 billion dollars. They exchanged these dollars for other currencies. This increases the supply of dollars and may even decrease demand if so far the central banks have been purchasing dollars. Due to the higher supply and not higher demand the 'price' or exchange rate of the dollar fell. At the same time the countries also implemented policy changes. This would effect the mid to long term exchange rates.

The Japanese interest rate did indeed fall.   
<http://www.tradingeconomics.com/japan/interest-rate>
  
 Mind though that the US interest rate also fell   
<http://www.tradingeconomics.com/united-states/interest-rate>


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