This paper investigates determinants of yen appreciation for the 1-year period after the G5 (Plaza) agreement of September 1985. During that period, five waves of appreciation, each lasting 2 weeks to one 1 month, separated by relatively calm periods can be identified. For each wave and calm period, the changes in the yen/dollar exchange rate are decomposed into those taking place in the Tokyo, Europe, and New York markets. In addition, the correlations among the yen, mark, and pound, and the correlations between the yen/dollar exchange rate and the long-term interest rate differential for each market for each wave are studied. Determinants of each appreciation wave are identified by news and regression analyses. The determinants identified include the U.S. policy switch (in the first wave), the Bank of Japan's “High interest rate” policy (in the second wave), and various mixes of the sharp decline in oil prices and the decline of the U.S. interest rate (in the third, fourth, and fifth waves). These findings are consistent with a view that the exchange rates respond mainly to news of fundamentals and that the exchange rates are not manageable by coordinated intervention alone. J. Japan Int. Econ., September 1987, 1(3), pp. 275–298. Harvard University, Cambridge, Massachusetts 02138; University of Minnesota, Minneapolis, Minnesota 55455; and National Bureau of Economic Research, 1050 Massachusetts Avenue, Cambridge, Massachusetts 02138.