Word: dollarization
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Dates: during 1980-1989
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...dollar had the financial world in a tizzy last week. Buy and sell orders for the currency flooded into markets around the world, propelled by gusts of verbiage that flew between Washington and its major foreign economic allies. Money traders from Sydney to London to San Francisco whipsawed the value of the greenback before it settled down somewhat at week's end, 2.4% higher against major currencies than the week before...
This exercise in dollar diplomacy was evidence that a spirit of economic cooperation, which prevailed only a year ago among the major Western economic powers, has seriously eroded. The basis for the turmoil: sharp differences between the Reagan Administration and U.S. trading partners over how to deal with the nation's huge trade deficit. Rather than concord, said Rimmer de Vries, chief international economist for Morgan Guaranty Trust, "it's open warfare...
...strained mood in Washington contrasted greatly with the atmosphere after a G-5 meeting at New York City's Plaza Hotel in September of last year. There the Western powers agreed to reduce the value of the dollar in concert, and thus try to undercut the U.S. trade deficit. In fact the dollar had already begun to decline, starting in February 1985, but the Plaza pact marked a commitment to continue the trend. From its February peak, the dollar fell by some 30% against other major currencies within 18 months...
...ultimate gambit to reduce the trade gap has not succeeded, at least so far. In theory, a weaker dollar should eventually cut into the trade deficit by making imports more expensive and exports more competitive. Instead, the deficit is running at an annual rate of $175 billion, compared with a record $148.5 billion...
...Japanese officials to stimulate their economies, preferably by lowering interest rates, and thus encourage U.S. exports. But he felt his pleas were falling on deaf ears. On Sept. 18, the Treasury Secretary warned that if West Germany and Japan refused to take steps to expand their economies, the dollar would have to depreciate further. His threat started the latest U.S. currency tailspin. Within 24 hours the dollar for the first time in more than five years traded for less than two West German deutsche marks...