In Tokyo today, the dollar gained against the yen for the fifth consecutive trading day, climbing to its highest level since August 1992.

Traders said overseas players bought dollars on hopes that the Bank of Japan, the nation's central bank, would not step into the market to sell the U.S. currency.

"It's all sort of racing up, getting higher and higher," said Stuart Reed, a trader at Ueda Harlow Ltd., a currency brokerage firm in Tokyo.

In midday trading in New York today, the dollar was trading at 126.78 yen, up .70 yen from late yesterday. It now has gained a total of more than 4 yen in the past five trading days.

Rising domestic interest rates and economic anemia in Japan has helped increase global demand for dollars. Foreigners are using those dollars to buy U.S. stocks, bonds and other assets that are delivering a greater return on their money than investments in other countries.

The everyday changes wrought by the ups and downs of the dollar's worth abroad can work subtly and slowly, so most Americans might not notice.

(In Hawaii, the currency moves mean Japanese tourists get fewer dollars for their yen and therefore spend less money here.

Local tourism officials and economists also have warned that a strengthening dollar could intensify the recent drop in Japanese tourists to the state. The Japanese market is one of the most critical for the state's No. 1 industry, accounting for more than 30 percent of the visitors to Hawaii.)

For the U.S. economy, forecasters who follow the dollar's behavior say that at least for now, the dollar's vitality is doing more good than harm.

A stronger dollar not only attracts foreign capital to this country but represses inflation by making imports cheaper for Americans to buy. Were the dollar to weaken, foreign investors might put their money elsewhere and the currently benign rate of inflation might start to creep up. That, in turn, could undermine a stock market that's still hurting from a two-week downturn.

"You can't say this is a bad thing," said David DeRosa, managing partner at Quadrangle Investments in Greenwich, Conn. "It's better for our capital markets and better for the inflation front."

That doesn't mean the dollar's ascent won't start to hurt eventually, however.

If the U.S. economy starts to weaken, the effects of a strong currency could translate into a severe decline in exports, rising unemployment, falling incomes and even a possible recession.

"You're going to see very few short-term problems developing from a stronger dollar," said Anthony Chan, chief economist at Banc One Investment Advisors Corp. in Columbus, Ohio. "It's like parents with a child who's irresponsible and keeps wasting candy money. As long as the parents have jobs it's not a problem."