Dollar Hits Highs, Then Drops Back

The dollar rose further Friday, touching a 4-year high against the yen and 34-month high vs. the mark on benign U.S. inflation news, the ebullient American stock market and more economic anemia in Germany.

Although rumors of a possible Bank of Japan intervention for the yen caused an early sell-off of dollars, underlying demand for the currency remained strong and pushed the dollar back up. It closed slightly lower vs. the yen and mostly higher in other foreign-exchange dealings.

Even with the three-day weekend in the United States because of the Washington’s Birthday holiday Monday, when U.S. financial markets are closed, many traders bought dollars on the assumption the currency will keep rising.