DOLLAR TAKES BEATING FROM FOREIGN CURRENCIES.

Byline: Jonathan Fuerbringer The New York Times

The dollar plunged Friday against the Japanese yen, ending the week with a 5 percent loss in value, its biggest setback to date in its rally from record lows two years ago.

The American currency's decline against the yen also sapped its strength against the German mark and other European currencies. For the week the dollar was off 2.5 percent against the mark.

The immediate cause of the fall against the yen were comments from Japanese officials who hinted that the government was ready to intervene in the markets to bring down the value of the dollar.

These comments had special resonance because of the agreement in February between the United States and its key industrial allies that the dollar had strengthened enough from the record lows it reached against the yen and mark in April 1995. That accord was affirmed last month when representatives of the Group of Seven countries - the United States, Japan, Germany, Britain, France, Italy and Canada - met again in Washington.

If the dollar's slide continues, especially against the yen, it could help American automobile manufacturers, who have seen their Japanese competitors cut into American market share this year, when the stronger dollar made their prices more competitive. In April, the Big Three's share of American sales dropped 2.1 percentage points to 73.3 percent.

Conversely, a weaker dollar would make imports more expensive, adding to inflationary pressure here. And American tourists expecting bargains overseas this summer would be disappointed.

But whether this week's decline represents an end to the dollar's two-year climb, which lifted it 58 percent against the yen and 28 percent against the mark, is open to debate. Analysts are split over the yen, with some arguing that the dollar may have reached its peak. But they agreed that the dollar could rebound against the mark.