![]() ![]() On August 20, Finance Minister Mizuta Mikio visited the emperor at Nasu Imperial Villa, his summer residence in the mountains north of Tokyo, to make a presentation. But one senior personage observed the situation calmly, namely Emperor Hirohito (posthumously Emperor Shōwa). Among officials in Tokyo, opinions were split on whether to close the foreign exchange market or to leave it open, and confusion prevailed within the administration. When Nixon dropped his August 15 bombshell, the market had already opened in Japan on the morning of August 16. By contrast, Japan’s monetary authorities were firmly determined to maintain the fixed rate of ¥360 to the dollar that had been maintained for over 20 years, and they had adopted an eight-part program aimed at preventing the yen from appreciating, including steps to open the Japanese market wider to imports. Nixon, a schemer, was gambling that his surprise package would bring all these problems under control.įor several months before Nixon’s August 15 address the greenback had been under selling pressure in European markets, and some countries with strong currencies, such as West Germany, had switched to floating exchange rates. Both inflation and unemployment were on the rise, and the swelling deficit in the balance of payments was sapping international confidence in the dollar. The United States at the time was struggling under the financial burden of the Vietnam War, which was making the government’s “guns and butter” spending policy untenable. The “Nixon shock,” as this sudden move was dubbed in Japan, was part of an economic policy package that included a freeze on prices and wages and the imposition of a 10% surcharge on imports. It ended up paving the way to adoption of the current system of floating exchange rates. This move effectively brought down the post–World War II Bretton Woods international monetary system, under which the US dollar was convertible to gold at a rate of $35 dollars to the troy ounce and other major currencies were pegged at fixed rates to the dollar. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.On August 15, 1971, 50 years ago this month, US President Richard Nixon delivered a televised address in which he announced the suspension of the convertibility of the dollar to gold. compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. We may also receive compensation if you click on certain links posted on our site. We may receive compensation from our partners for placement of their products or services. While we are independent, the offers that appear on this site are from companies from which receives compensation. is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions.
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