The dollar rose against the yen Tuesday after billionaire investor Warren Buffett proposed a plan to bail out struggling insurers of municipal bonds.

Buffet, who runs investment holding company Berkshire Hathaway, said he would offer to insure the insurers for up to $800 billion worth of municipal bonds, in an interview on CNBC. One insurer had rejected his offer, he noted.

U.S. stocks ended the day higher on the news, with financial stocks benefitting most.

The dollar followed suit, rising to 107.29 yen from 106.91 late yesterday.

The euro gained against the dollar, however, after an index measuring Germany's business sentiment beat expectations. The Center for European Economic Research rose to -39.5 points from -41.6 points, beating analysts' expectations of -45.0 points.

The euro rose to $1.4583 from $1.4522 yesterday.