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HISTORICAL EVENTS IN THE FX MARKET

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HISTORICAL EVENTS IN THE   FX MARKET PLAZA ACCORD—DEVALUATION OF U.S.  DOLLAR (1985) _______________________________________________________________________________________________ After the demise of all the various exchange rate regulatory mechanisms  that characterized the twentieth century—the gold standard, the Bretton  Woods standard, and the Smithsonian Agreement—the currency market  was left with virtually no regulation other than the mythical “invisible  hand” of free market capitalism, one that supposedly strived to create  economic balance through supply and demand. Unfortunately, due to  a number of unforeseen economic events—such as the Organization of  Petroleum Exporting Countries (OPEC) oil crises, stagflation through out the 1970s, and drastic changes in the U.S. Federal Reserve’s fiscal  policy—supply and demand, in and of themselves, became insufficient  means by which the currency markets could be regulated. A system of sorts  was needed, but not one t