The sale, which was confirmed by a currency trader who deals with the BOJ and spoke on condition he not be identified, came after the Japanese currency strengthened to 107.56 yen per dollar -- the highest since November 2000. The central bank has sold a record 16.2 trillion yen this year.

``They are just voicing their displeasure,'' said Grant Wilson, a yen trader at Mellon Financial Corp. in Pittsburgh, referring to BOJ policy makers. ``It is sort of reinforcing the view that this might be the line in the sand for the BOJ, and they showed it with some muscle today.''

The Japanese currency weakened to 109.10 per dollar at 10:15 a.m. from 107.95 yesterday and fell against all 16 of the major currencies tracked by Bloomberg. It dropped for a seventh straight day against the euro, losing 0.73 percent to 130.21 yen per euro from 129.25. The dollar, which yesterday sank to a record low against the euro, strengthened to $1.1917 per euro from $1.1973 after U.S. housing starts unexpectedly rose in October to the highest in almost 18 years.

Wilson said the Japanese currency would trade between 108 yen per dollar and 111.50 yen per dollar.

The dollar tumbled yesterday on concern about how the U.S. will finance its current-account deficit. A Treasury report showed foreign purchases of U.S. securities fell to the lowest level in five years and the Bush administration said it intends to limit some imports from China.

`Sell First'

``People sell first, and ask questions later,'' said Ramachandra Bhagavatula, chief economist for North America in New York at Royal Bank of Scotland Group Plc. ``They're now trying to figure out how much of an impact yesterday's move will have on the dollar's direction for the rest of the year.''

The drop in foreign purchases of U.S. stocks and bonds in September to a net $4.19 billion in September from $49.9 billion in the previous month raised concern among some investors about the ability of the U.S. to finance the deficit in its current account, the broadest measure of trade and investment. September's figure was the smallest since September 1998.

In the second quarter, the current-account deficit held at a record $138.7 billion. The U.S. has had to borrow more money overseas to satisfy demand for imported goods and services to finance investment not covered by U.S. savings.

Current Account

``We have very good growth, but that's causing the current- account deficit to expand,'' said Kenneth Landon, senior currency strategist, at Deutsche Bank in New York. ``It has caused a protectionist backlash in Washington. You can see how the market reacts to that. It reacts by selling the dollar.''

Landon said the dollar would weaken to $1.22 per euro by the end of the year.

Regarding Chinese imports, the Bush administration said it would limit imports of some textiles and apparel from China to stem a record flow of goods from that nation and protect mills in states such as North Carolina. U.S. textile and apparel companies such as Milliken & Co. had said rising imports from China threaten U.S. and Caribbean manufacturers.

``We are going to see an escalation of rhetoric about trade,'' Robert E. Rubin, former U.S. Treasury Secretary and now an executive at Citigroup, said after a speech to the Council on Foreign Relations in New York. ``There's more of a threat about this than I thought three months ago. Protectionism would be very damaging to us.''

Investigation

Some U.S. companies and lawmakers blame China's currency policy -- which pegs the yuan around 8.3 to the dollar -- for the increasing U.S. trade deficit and some of the 2.5 million manufacturing job losses during President George W. Bush's tenure. Traders have said the Bush administration has endorsed a weaker dollar as a way to boost exports and keep the economy growing.

UBS AG, the largest trader in the $1.2 trillion-a-day foreign-exchange market, ICAP Plc, and Collins Stewart Tullett Plc are among the companies whose employees were arrested by U.S. federal agents in relation to alleged currency trading fraud. Forty-seven defendants will be charged today in connection with an 18-month undercover investigation into the foreign-exchange trading market, U.S. Attorney James Comey said in a statement.