The China Summit: Can This Yen Be Saved?

As Bill Clinton prepared to jet to Beijing this week, the most crucial diplomacy in Asia was taking place over the telephone wires between Tokyo and Washington. It led to a $2 billion flyer by the U.S. Treasury to support the Japanese yen, which briefly pumped up stock markets and threw the Clinton Administration into the treacherous depths of the international money markets. It was the first time in three years that the U.S. had jumped into the currency markets, and it put Washington's credibility--and that of Treasury Secretary Robert Rubin--on the line in the global currency crisis.

Rubin, a former...