why do governments keep exchange rates low 
conversely governments may seek to keep their exchange rates low to increase the competitiveness of exports in the 1980s following years of complaints from u s companies about competition from cheap japanese imports the u s government convinced japan to allow its currency to appreciate as part of the plaza accord 8 the currency s value climbed from 250 yen to one u s dollar in early 1985 to less than 130 yen by 1990 the u s trade deficit with japan fell from 55 billion in 1986 to 41 billion in 1990 9the bottom linein 1997 decades of economic policy planning that featured close relationships among government policy planners regulators the industries they regulated and financial institutions came to a head when markets began putting downward pressure on asian currencies the most vulnerable were those countries with high levels of debt and insufficient financing to pay it the imf stepped in to bail out the most affected economies but it imposed strict conditions in exchange for the help some measures included requiring governments to cut spending raise taxes eliminate subsidies and restructure their financial systems the crisis also serves as a case study in asset bubbles and how quickly panic selling can trigger contagion that central bankers cannot control 