The dollar has been tumbling this week, following remarks by the U.S. Treasury Secretary that many currency traders interpret as a shift away from Washington's strong dollar policy. Japanese authorities appear determined to stem the yen's rise against the dollar.

Japan's Finance Ministry is making it clear it is unhappy with the yen's rise to levels not seen in nearly a year. Many foreign currency traders think the Bank of Japan has been covertly selling yen to keep the dollar from falling further. In the past several days, the yen has hovered around 116 to the dollar, down about three percent this month and seven percent since late last year. The decline escalated after U.S. Treasury Secretary John Snow recently said the weaker dollar helps U.S. exports.

But Deutsche Bank's senior currency strategist in Tokyo, Marshall Gittler, says Mr. Snow's comments are not the entire reason the dollar is falling. "That may have accelerated the move and caused some recent turbulence, but it is not the underlying cause," he says. "The underlying cause continues to be the imbalance in the U.S. current account deficit."

Mr. Snow also told the Reuters news service this week that Japan should not try to weaken the yen to boost its ailing economy. A weaker yen makes Japanese exports cheaper, but makes imports more expensive.

Currency traders think the comments indicate the United States is backing away from its long-standing strong dollar policy. The White House insists there has been no change in the policy.

No matter what the U.S. policy is, Japanese officials indicate they prefer a weaker yen.

The top government spokesman has called for decisive action to stop rapid changes in exchange rates. And finance ministry officials are saying they want to "prevent volatility." The ministry made similar comments in past years when it was trying to halt big rises in the yen.

But Mr. Gittler at Deutsche Bank says a stronger yen is not necessarily a problem. "The fact is though that Japan imports more in dollars than it exports in dollars. So, Japan, as a whole, benefits from a stronger yen. And a lot of companies are running a matched book, as it were. They import goods in dollars and they export a lot in dollars too," he says. "So that when the yen is strengthening against the dollar it doesn't have that much of an effect on them."

Mr. Gittler and other currency experts say that because the yen is weakening against the Euro, Japanese companies that export to Europe are benefiting from the currency turmoil.