Dollar tumbles to 111.98 yen

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.