Financial encyclopedia

The strength of the US exchange rate swept through financial markets in 2022, pushing down non-US currencies to the point of central bank intervention. The Bank of England intervened to buy bonds, the Bank of Japan more directly sell the United States in the international market

The dollar, buying the yen to support the won and, of course, maintaining the Hong Kong dollar peg ️, led the HKMA to do a lot of selling of Hong Kong dollars. What is the impact of currency instability and strength?

That brings us to the Plaza Accord, a classic example of currency trading.

On September 22, 1985, the United States, Japan, Britain, France and Germany signed an agreement to jointly intervene in foreign exchange markets to bring the dollar into line with the major currencies of the Japanese yen and the German mark

The Japanese yen eventually surged, easing the U.S. trade deficit but also leading to a lost two decades for the Japanese economy.

Japan's economy has long been on the brink of deflation, plunging from its position as the world's second-largest economy. The deal represents a major coordinated intervention in international markets. Teamed up with

The intervention in the dollar has led to huge gains in major currencies over the past two years, with the yen up 86.1 percent, the German mark up 70.5 percent, the French franc up 50.8 percent and the Italian lira up 4 percent

6.7 percent, the pound up 37.2 percent and the Canadian dollar up nearly 11 percent. The Japanese economy is the victim of this agreement, as it did during the Great Depression of the 1990s

It was not replaced until February 1987, when the Louvre Agreement was signed by the SEVEN major industrial NATIONS. Some people say that this unilateral surge in the dollar has formed a disaster and triggered an economic crisis. But with square

Unlike the deal, the dollar's rally this time has been driven by a sharp rise in interest rates and a sharp interest rate hike by the Federal Reserve. The market has become accustomed to the U.S. trade deficit ️ and printing money to prop up the market

Debt is entrenched in international markets; In addition, before the Plaza Accord, the trade war was initiated by the United States and Japan, but Japan was still highly dependent on the United States after the war, and Japan joined forces voluntarily

Intervention, this time the trade war is a counterweight between China and the United States, and China has little chance to compromise like Japan. Therefore, no matter the formation of a financial crisis, or the emergence of joint intervention

It will still be small.