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The dollar plummeted to a third straight record low against the Japanese yen today, putting pressure on Washington to deal with the deficit and raise interest rates. The currency has been falling sharply since late last week, wreaking havoc on the bond market. But the stock market remained stable today, prompting many economists to bet that the Fed will not try to compensate by raising interest rates again, especially since such a move could lead to a recession. TIME Washington correspondent Suneel Ratan blames the tumble on a combination of two events: the Senate's failure to approve the balanced budget amendment, and political and financial turmoil in Mexico, where the U.S. is spending billions to boost the peso. Ratan says both situations have made international investors less confident in the dollar, which fell to 92.70 yen in late afternoon trading. The currency also declined in most European markets, falling to 1.40 German marks, the lowest level in more than two years.