🇺🇸 THE FED IS TEASING YEN INTERVENTION — A MODERN-DAY PLAZA ACCORD?
Back in 1985, the U.S. dollar had gotten dangerously strong. U.S. exports were collapsing, factories were struggling, and trade deficits were exploding. Congress was even considering heavy tariffs on Japan and Europe.
To stop the damage, the U.S., Japan, Germany, France, and the U.K. met at New York’s Plaza Hotel. They agreed to weaken the dollar together by selling dollars and buying other currencies. This became the Plaza Accord — and it worked.
The results over 3 years were dramatic:
Dollar index dropped nearly 50%
USD/JPY fell from 260 → 120
Yen doubled in value
It was one of the biggest currency resets in modern history. When governments act together in FX, markets follow, not fight.
A weaker dollar pushed:
Gold higher
Commodities higher
Global markets higher
Asset prices higher in USD terms
Fast forward to today:
The U.S. still runs massive trade deficits
Currency imbalances are extreme
The yen is again very weak
This is why “Plaza Accord 2.0” is being talked about.
Last week, the NY Fed conducted rate checks on USD/JPY — the exact move before an FX intervention. This signals the Fed could sell dollars and buy yen, just like in 1985.
Nothing has officially happened yet, but markets reacted immediately — because traders remember what a Plaza-style intervention can do.
If it happens again, assets priced in dollars could surge across the board.