The Plaza Accord was a joint agreement signed on September 22, 1985, at the Plaza Hotel in New York City, between France, West Germany, Japan, the United Kingdom, and the United States, to depreciate the U.S. dollar in relation to the French franc, the German Deutsche Mark, the Japanese yen and the British pound sterling by intervening in currency markets.

[7] From 1980 to 1985, the dollar had appreciated by about 50% against the Japanese yen, Deutsche Mark, French franc, and British pound, the currencies of the next four biggest economies at the time.

A broad alliance of manufacturers, service providers, and farmers responded by running an increasingly high-profile campaign asking for protection against foreign competition.

[10][11] The devaluation was justified to reduce the U.S. current account deficit, which had reached 3.5% of the GDP, and to help the U.S. economy to emerge from a serious recession that began in the early 1980s.

At the 17 January 1985 G5 meeting attended by James Baker, a small amount of currency intervention to depreciate the dollar was agreed upon and subsequently took place.

US intervention was small in those months, but the German authorities intervened heavily to sell dollars in foreign exchange markets in February and March.

On 22 September 1985, the finance ministers and central bank governors of the United States, France, Germany, Japan and Great Britain met at the Plaza Hotel in New York City and came to an agreement on the announcement that "some further orderly appreciation of the non-dollar currencies is desirable" and they "stand ready to cooperate more closely to encourage this when to do so would be helpful".

[7] The devaluation made U.S. exports cheaper to purchase for its trading partners, which in turn allegedly meant that other countries would buy more American-made goods and services.

[citation needed] However, the rising yen may also have contributed to recessionary pressures for Japan's economy, to which the Japanese government reacted with massive expansionary monetary and fiscal policies.

[6][5] Economist Richard Werner says that external pressures such as the accord and the policy of Ministry of Finance to reduce the official discount rate are insufficient in explaining the actions taken by the Bank of Japan that led to the bubble.