The Effect of Plaza Accord to Taiwan’s Exchange Rate Policy
Date Issued
2011
Date
2011
Author(s)
Liu, Guo-Hua
Abstract
Exchange rate policy for the government''s economic policy has always been an important part. Adoptions of exchange rate policy also shifted with the conditions and delivery times vary. Since the World War II, the Taiwan government tends to take an active involvement of NTD’s exchange rate, hoping to maintain the stability of exchange rate and a certain interval range in order to facilitate their economic development. As the international economic environment has changed, countries shifted their conventional fixed exchange rate system to a floating exchange rate system. Taiwan also diverted to floating rate system since 1978.
1985, due to the huge U.S. double deficit, overvalued dollar caused the voice to review its real value. And finally signed the Plaza Accord, the joint intervention in foreign exchange markets makes major country''s currency which has huge surplus to the U.S. (such as the yen, deutsche mark) appreciate relatively dollar. After 1960’s, Taiwan has a huge trade surplus to U.S. After the Plaza Accord, Taiwan becomes the main target of the U.S. review, in repeated negotiations on trade and exchange rate, exchange rate of NTD has become the focus.
Can be found between the different actors have different bias, Taiwan and the U.S. government has its own bias, and thus acts as its consideration. In order to avoid U.S. trade retaliation, Taiwan government takes a slow appreciation strategy finally. The main reason is to avoid sharp rise in NTD makes huge impact to exports of businesses. But it also resulted in too much hot money, the stock market, real estate boom and other sequelae.
Subjects
Plaza Accord
Exchange Rate Policy
Bias
Slow Appreciate
SDGs
Type
thesis
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