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May 03 - 02:55 PM

USD: Is Another Plaza Accord On The Cards - Credit Agricole

By eFXdata  —  May 03 - 01:30 PM

Credit Agricole CIB Research discusses the possibility for a concerted intervention to weaken the USD vs other majors akin to the Plaza accord that the US, France, Germany, the UK and Japan first agreed on in February 1985 and signed in September of that year.

"The USD NEER depreciated by almost 30% from its peak in February 1985 to February 1987 when a new agreement – the Louvre accord – was signed to stabilise the currency," CACIB notes. 

We think that a concerted intervention may be less likely for now given: (1) the persistent policy divergence between the hawkish Fed and the relatively more dovish ECB and the BoJ in particular, which can render any FX intervention ineffective; (2) the lack of unanimity among policymakers about the need for FX intervention at present; and (3) the fact that, despite the aggressiveness of recent FX moves, the USD NEER and REER are still well off their 1980s highs," CACIB adds. 

Crédit Agricole Research/Market Commentary


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