In June 1986, I returned to the Ministry of Finance and was appointed counselor in the secretariat's research and planning division. At this time, trade friction and economic conflicts between Japan and West Germany on one side and the U.S. on the other were becoming serious.
Fearing growing U.S. protectionism, Japan and West Germany agreed to the Plaza Accord of September 1985. This was an agreement among G5 countries, including the two other nations, to intervene in the foreign exchange market to weaken the dollar and strengthen the yen and the deutsche mark. The dollar fell from 230 yen to the dollar to 200 yen immediately after the accord and to 150 yen a year later. Nonetheless, the German and Japanese trade surpluses with the U.S. did not fall.
