NEW YORK -- The United States launched a concerted bid Monday to push up the dollar after it hit a record low, saying publicly it supported a "stronger dollar" and repeatedly buying the currency aggressively in the open market.


The moves were the strongest by the U.S. government this year, as the dollar has fallen sharply against the Japanese yen and the Deutsche mark.


The dollar fell to 86 yen in early trading, eclipsing the prior 86.30-yen record low set Friday.


The drop led the Clinton administration to order the Federal Reserve to intervene and buy back dollars for marks and yen, hoping its presence in the currency market would drive the dollar back up.


The Fed first entered the market overnight in Asia -- its first appearance in the Asian foreign exchange markets since February 1992 -- and then continued buying during the day in New York.


"We acted in the exchange markets overnight out of concern with recent movements in exchange rates," Treasury Secretary Robert Rubin said in a statement.


"This administration believes a strong dollar is in America's interest, and we remain committed to strengthening the fundamentals that are ultimately important to maintaining a strong and stable currency," he added.


Since the start of the year, the dollar has fallen 10 percent against the Japanese yen and 9 percent against the Deutsche mark.


After the intervention, the dollar was trading at 1.3725 marks, against its low of 1.3680. It was also trading at 86.25 yen, up from a low of 86 yen hit earlier in the day.


The action by the United States came just days after Germany and Japan cut interest rates in a bid to support the battered dollar.


In a surprise move that caught financial markets off guard Thursday, the German Bundesbank slashed its key discount rate by a half percentage point, to 4 percent. Japan also eased market rates but left its benchmark discount rate unchanged.


On Monday, with the dollar sliding almost continuously, the Tokyo stock market dropped 4.7 percent to its lowest since August 1992.


The strength of the yen, which has appreciated by 17 percent since the beginning of the year, threatened to squeeze Japanese exporters' profits and throttle a shaky economic recovery.


The Federal Reserve, which met to discuss monetary policy last week, left U.S. interest rates unchanged. By Monday, the administration had had enough of its lagging currency.


The intervention took many dealers by surprise.


"It certainly raised a few eyebrows," said Bob Lynch, analyst at MMS International. "But it seemed to show heightened concern about the dollar on the Fed's part."


Dealers said the dollar will likely continue to edge lower unless there is concerted central bank intervention.


"The market needs to see some real muscle," said Gabriele Schmitt, vice president at the Bank of New York. "Unless we see a real strong sense of coordinated effort, the market is very much looking at the downside."


In London, dealers said there was no sign of any European central bank joining the Fed to support the dollar.


"I don't expect much change in sentiment until we get the U.S. administration not only telling but also convincing the market that they want a stronger dollar," Peter Wood, a dealer at Bank of Boston in London, said.











Worries about the weakness of the dollar and Japanese shares spilled over into Europe's stock markets, which showed modest gains on low trading volume.


"There's very little activity in the market today," said one London share dealer. "The dollar and what happened in Japan overnight are the main worries."


The FTSE 100 closed 5.2 points up at 3,143.1, The German DAX index ended 8.23 points higher at 1,930.82 and the French CAC-40 index closed up 4.52 at 1,864.00.


In Frankfurt, dealers said floor trade was minimal with investors transfixed by the dollar's continued weakness despite last Thursday's German rate cut.