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Puck
The Texan
Joined: 05 Jan 2004
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 Thu Jan 13, 2005 8:35 am US Trade Deficit Sets Record--Dollar Plummets |
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| Quote: | Dollar plummets as US trade deficit sets record
01-12-2005, 23h52
SGE.BBP44.120105235131.photo00.quicklook.default-245x183.jpg
Joel Nito - (AFP/File)
NEW YORK (AFP) - The dollar fell sharply against the euro and other major currencies after the US government announced the trade deficit swelled unexpectedly in November to a record 60.3 billion dollars.
The ballooning trade deficit, which US Treasury Secretary John Snow said was the result of strong US economic growth outpacing that of other countries, sent the euro soaring to 1.3293 dollars, its highest level against the dollar since January 5.
However, the euro gave back some ground in late New York trading.
At 2200 GMT, the euro was changing hands at 1.3255 dollars, up from 1.3106 dollars late Tuesday.
The dollar also lost ground against the Japanese yen and the British pound in the wake of the trade numbers.
The Commerce Department estimated that US exports sank 2.3 percent in November, driving the US trade deficit to a record 60.3 billion dollars.
While exports fell to a five-month low of 95.6 billion dollars, imports rose 1.3 percent to a record 155.8 billion as the bill for imported oil rose by 17.7 percent, or more than two billion dollars, to a record 14.2 billion.
The figures are adjusted for seasonal factors, but not price changes.
The trade gap increased a surprising 7.7 percent from October's revised 56 billion dollars and 50.8 percent from November's 40 billion.
Wall Street had expected the trade deficit on goods and services to shrink to about 53.3 billion dollars, according to a survey conducted by CBS MarketWatch.
The gap widened despite a weakening dollar, which should make US goods and services cheaper both at home and abroad.
"Both imports and exports fell but the decline in exports certainly surprised analysts, demonstrating that the lower dollar does not yet have the desired impact," said Manfred Wolf, director of FX Advisory at Hypovereins Bank.
White House spokesman Scott McClellan said President George W. Bush sees the record trade deficit as evidence the United States is the global driver of economic growth.
"Our economy is the economic engine for world growth," McClellan told reporters at the White House, adding that "because of that prosperity, Americans are shopping in the global marketplace, buying more goods and services than other countries which are not growing as fast."
The dollar fell some 16 percent against the euro last year as the twin US trade and budget deficits ballooned to record highs.
In late New York trade, the dollar slumped to 102.31 yen, compared with 103.30 yen late Tuesday. The pound was at 1.8904 dollars, up from 1.8778.
The dollar stood at 1.1679 Swiss francs, down from 1.1834 Tuesday. |
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