What 1987 agreement aimed to stabilize exchange rates after the Plaza Accord?

The 1987 agreement that aimed to stabilize exchange rates after the Plaza Accord was the Louvre Accord.

The Plaza Accord of 1985 had encouraged a sharp fall in the U.S. dollar against the Japanese yen and German Deutsche Mark. By 1987, policymakers feared that continued dollar weakness could damage economies and disrupt international trade. Finance ministers and central-bank governors therefore met in Paris and agreed to support greater exchange-rate stability around prevailing levels.

The Louvre Accord was formally called the Statement of the G6 Finance Ministers and Central Bank Governors. Canada, France, West Germany, Japan, the United Kingdom, and the United States signed it; Italy declined to sign. The agreement also included domestic policy commitments, such as deficit reduction, tax changes, spending restraint, and interest-rate measures.

A common mix-up is reversing the roles of the Plaza and Louvre agreements. Plaza was intended to push the dollar lower, while Louvre was intended to slow and stabilize that decline. Despite the agreement, the dollar weakened further in 1987 and early 1988 before later recovering.