With the downtrend gathering momentum in Tokyo, the dollar touched the 111 yen level momentarily late May 20 for the first time since Dec. 6, 1996, on a rush of selling by exporters and institutional investors.
The dollar tumbled to a low of 111.98 yen from a high of 115.67 yen in early morning deals. As of 5 p.m., the dollar was quoted at 112.40-112.43 yen, compared with 116.27-30 yen at 5 p.m. May 19.
The U.S. currency fell amid fading expectations of higher U.S. interest rates. There was speculation that the U.S. Federal Reserve Board's policy-setting Federal Open Market Committee may decide to keep short-term interest rates unchanged at its meeting May 20.
As another major factor behind the dollar's weakness, commercial bank officials cited a news report that U.S. Treasury Secretary Robert Rubin gave a fresh warning against a "significant increase" in Japan's external surplus. Rubin's remark to reporters overnight, made after a speech at the Japan Society in New York, is believed to have rekindled fears about trade friction between Japan and the U.S.