U.S. Trade Deficit Hit Six-Year High in June; White House Voices Fear Over Yen's Strength
The nation recorded its worst monthly merchandise trade deficit in almost six years in June, as exports of U.S. goods were choked off by slumping economies in most of the industrial world, the Commerce Department reported yesterday.</br></br>The Treasury Department yesterday voiced fears for the first time that the high value of the Japanese yen may be damaging seriously Japan's economy and worsening economic problems for the rest of the world in the process. After the Treasury statement, the Federal Reserve bought hundreds of millions of dollars to raise its value against the yen.</br></br>The two actions served to push the dollar's value up sharply. On Wednesday, it took just over 101 yen to buy one U.S. dollar. Yesterday, the rate was almost 106 yen to the dollar.</br></br>On the trade front, businesses and consumers boosted purchases of foreign goods to a record $49.7 billion in June, a 5.1 percent increase from May's figure, despite lackluster growth in the U.S. economy. Exports fell 3.3 percent, to $37.7 billion, in large part because of recessions in Europe and Japan. The Midwest floods also interfered with exports from that region.</br></br>The resulting $12 billion merchandise trade gap in June was much greater than economists had expected. The U.S. deficit with Japan widened to $4.3 billion in June from $3.7 billion in May.