For the first time since August 1991, the dollar on Monday hit 137 yen in Tokyo after reports spread that U.S. Treasury Secretary Robert Rubin said he could tolerate a yen as weak as 140 yen or 150 yen to the dollar to prevent the Japanese economy from collapsing.
The dollar was trading between 137.13-15 yen at 5 p.m., up from 136.62-65 yen at 9 a.m. It later went as high as 137.19 yen during the day, a level that was last recorded on Aug. 28, 1991, when the yen got to 137.20 yen.
Market players rushed to buy dollars after getting wind of a story posted on the Web site for U.S. News and World Report magazine, in which sources are quoted as saying Rubin was "willing to let the Japanese yen keep plunging -- below the 140-yen to-the-dollar level and even to 150 yen -- if that's the only way to keep the world's second-biggest economy from totally collapsing."
Rubin apparently did not dispute the story when asked about it by reporters, and reportedly emphasized that U.S. dollar policy would remain unchanged.
The yield on the No. 182 10-year government bond the same day fell to yet another record low -- 1.210 percent -- which dampened the yen market further, dealers said.