“It’s a scary time when economists wax nostalgic for the Reagan administration, but that’s exactly what’s going on today. Reagan, though no less an advocate of free markets than Bush, recognized the need for coordinated intervention when, during the mid-1980s, the dollar rose too high against European currencies. The pricey dollar was making U.S. exports exorbitantly expensive, leading both the White House and Europe to conclude that without immediate action Congress would follow through on protectionist threats. So in 1985 Treasury Secretary James Baker and Fed Chair Paul Volcker sat down at the Plaza Hotel in New York with European finance ministers and hashed out a deal, later known as the Plaza Accord, to flood the market with dollars. The market got the message, and over the next two years the greenback fell from more than 3 deutschmarks to 1.85.”
More on the tricky economics of the falling dollar here by Clay Risen in The New Republic.