Home From the mid-1980s the dollar plunged

From the mid-1980s the dollar plunged

From the mid-1980s, the cashback forex calculator Onl cashbackforexpipcalculatore plunged (a) Is the direction of the dollar due to the trade balance, or cashbackforexcalculatorOnline it determined by the capital balance? To this question, lets take a look at the representative situation of the dollar plunge in the mid-1980s, cashbackforexprofitcalculator then analyze the current situation, we should be able to draw some conclusions about the causes of the dollar plunge The representative dollar plunge was caused by the G5 (G5 Finance Ministers Meeting) Plaza Agreement in September 1985, which caused a significant decline in the dollar exchange cashback forex before and after the Plaza Agreement against the yen was about 240 yen. The dollars plunge was understood to be caused by the U.S. current deficit, which was thought to have gradually reached an unsustainable level, and that is why the dollar fell sharply. The dollars plunge is not so much the widening of the U.S. current deficit, but rather the reason for the near stagnation of overseas capital inflows to the U.S. needed to fill the hole. The plunge of the dollar exchange rate in the mid-1980s actually began in the first half of 1985 when the dollar exchange rate rose to about 260 yen against the yen in late February 85, and although it has been declining since then, the correct understanding should be the Plaza Accord in September of that year, which only increased the pressure to drive the dollar exchange rate down, and really went down the road of no return, but why in February 85? After the dollar exchange rate went to the peak, it will turn down? It goes without saying that it was the impact of the changing economic situation in the U.S. In the first half of the 80s, the oil crisis occurred in the world, and in order to avoid a simultaneous world recession and promote the world economic recovery, the U.S. made strenuous efforts in the process, the U.S. trade deficit and external imbalances continued to expand in the period of 83-84, which had already confirmed the avoidance of a simultaneous world recession, in In April 84, FRB made an unusual interest rate hike in the presidential election year, which moreover pushed the final high value of the dollar to accelerate the economic recovery even to the extent that it needed to be unchecked due to the FRBs announcement of the interest rate hike, so that the U.S. economy began to shift to a slow deceleration after the successful re-election of Reagan in the presidential election in November 84, and entered 1985, when FRB was already considering the issue of lowering interest rates The economic recovery The situation began to shift, financial policy also converted from austerity to moderate This is the reason why the first half of 85 years of the dollar will be converted from the rise to the peak of the background of the fall of the dollar simply put is that the April 84 interest rate hike to promote the rise of the dollar, 85 years began to fall before the final dollar high tent but between 84 and 85 years of the U.S. economy began to slow down, so the U.S. financial The decline in interest rates caused the dollar to decline from its peak, and the dollar exchange rate turned into a falling state. The current deficit hole will be simply filled, but the low interest rate situation, the capital inflow will gradually decrease, the result will cause the current deficit can not be filled, naturally it will cause the dollar to plummet the result of the foreign exchange market is composed of trade transactions and capital transactions, but the proportion of the latter has an overwhelming number of extremes, the exchange rate fluctuations are not determined by the trade balance, but by the capital balance. This means that the dollar is not determined by the current deficit, but by the movement of capital inflows. The most important factor that affects the movement of capital is the gold and profit situation, that is, the economic situation. If it is not to the extent of the slowdown in economic development, the capital inflow is completely blunted due to the low interest rate, the possibility of a sharp fall is very small. The dollar has been in the process of plummeting from the level of 240 yen to the level of 200 yen when the five countries intervened in coordination to reach the level of 120 yen in 87, and lets look at the monetary policy before the Plaza Agreement. For example, the OECD (Organization for Economic Cooperation and Development) warned that in 1983 the U.S. became a pure debtor country, and that this result would make the dollar in danger of falling. On the other hand, it was because the dollar exchange rate rose so high that the Plaza Accord of 1985 was necessary. The measures taken by the U.S. and Japan against the high dollar were, on the one hand, a warning against the risk of the dollars collapse, and, on the other hand, there was also an overestimation of the dollar exchange rate at that time and a considerable dissatisfaction with the excessive high dollar. There are also some examples of the situation, which is representative of the U.S. and Japan jointly organized the U.S.-Japan Committee on the Dollar and the Yen, which began in 84. The purpose of this committee is precisely to try to solve the problem of the rising dollar and the depreciation of the yen. It is alarming! But then the dollar-yen committee did not really solve the problem of stopping the dollar exchange rate Gauteng, did not play a real influence on the dollar exchange rate instead rose from 230 yen to 240 yen Americans really do not understand how the Oriental people to buy time "Taiji" thinking here and reminds people of Japan to engage in the process of floating exchange rates Japan is in the Tokyo Olympics period (1964) began the liberalization of the current account, 71 years of the Nixon shock to the collapse of the fixed exchange rate, although the yen exchange rate rose sharply, but the complete adoption of the exchange rate floating system is 73 years later think that our financial management must be for our financial and monetary stability and to buy time to decide the dollar exchange rate is what? At that time, there were many warnings about the excessive rise of the dollar exchange rate, and there were repeated warnings such as "if this continues, the dollar will rush to the opposite side, i.e., the danger of a sharp fall is very great", etc. However, in terms of monetary policy, there was nothing that could be done until the Plaza Agreement in 1985. What is the driving force behind this? As we wrote in part (a), in terms of economic policies, almost all of them were policies to promote the high growth of the dollar, that is, influenced by the oil crisis in the early 1980s, avoiding the world recession at the same time became the top priority, and the result was that the U.S. economic promotion policies that pulled the world economy were implemented with the highest priority, and fiscal investment was expanded, and policies to promote the rise of the gold profit were introduced under the influence of economic recovery. The worlds capital flowed into the U.S. In this way, it seems that what determines the movement of the dollar exchange rate is the monetary policy, the economic policy of the whole of what kind of impact on the movement of capital I think this is the most important factor

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