Japan Still Overshadowed by Nixon Shock 50 Yrs On
Tokyo, Aug. 16 (Jiji Press)--The abrupt announcement by then U.S. President Richard Nixon to stop the convertibility of the dollar to gold 50 years ago threw Japan into financial confusion, whose aftereffects still linger in the country.
The Nixon shock, which began with the announcement on Aug. 16, 1971, Japan time, brought an end to the fixed exchange rate of 360 yen to the dollar that had supported Japan's postwar economic revival.
"There were ominous clouds, but nobody expected something like that would happen that day," said Toyoo Gyohten, then head of the office of the vice finance minister for international affairs.
The announcement came soon after the Tokyo market opened that day. While many European countries closed their foreign exchange markets to avoid confusion from the strong dollar-selling pressure, the Japanese government and the Bank of Japan decided to keep the Tokyo market open.
As a result, the country was forced to buy 3.9 billion dollars to prop up the U.S. currency, spending over 1 trillion yen.
[Copyright The Jiji Press, Ltd.]