13. Note by the Under Secretary of the Treasury for Monetary Affairs (Volcker)1

Report of Oral Understanding

  • —Reached between Under Secretary Volcker and Vice Minister Inamura2 over the telephone at the initiative of Under Secretary Volcker.
  • —At about 3:30 A.M. (Bonn time), Tuesday, February 13, 1973.
  • —As to appropriate exchange rate at which the yen might be refixed.
  • —Minister Inamura accepted this formulation after discussion with Minister Aichi and Prime Minister Tanaka.

We understand that a rate of 264 yen per dollar is acceptable to the Government of Japan. We have indicated to the Government of Japan that a rate of 257 yen per dollar is acceptable to us. In the light of the close relationship and friendship between the United States and Japan, and taking account of further evidence from market and economic developments in coming weeks, we are confident this remaining small difference can be appropriately negotiated and resolved.3

Paul A. Volcker
  1. Source: National Archives, RG 56, Office of the Under Secretary of the Treasury, Files of Under Secretary Volcker, 1969–1974, Accession 56–79–15, Box 1, 1973 Devaluation. Secret; No Distribution. Marked “For File Only.”
  2. Koichi Inamura was the Vice Minister for International Monetary Affairs in the Japanese Ministry of Finance.
  3. This understanding was subsequently confirmed in a February 15 letter from Rogers to Ushiba. (National Archives, RG 59, Office Files of William P. Rogers, 1969–1973, Entry 5439, Box 25, WPR–Foreign Economic Policy) In telegram 247 to the White House, February 16, Ambassador Ingersoll reported from Tokyo on a conversation with Aichi that further confirmed this understanding. (Ibid., Box 4, White House Correspondence, 1972–73)
  4. Volcker initialed “PAV” above his typed signature.