Currency Trading: Dollar Falls Against Most Rivals Amid Wider U.S. Trade Deficit
NEW YORK -- The dollar weakened against all of its major rivals with the exception of the pound, stung by a report showing a surprisingly large U.S. trade deficit.</br></br>For all of 2002, the trade deficit reached a record $435.22 billion, a significant widening from the 2001 deficit of $358.29 billion.</br></br>This has serious implications for the U.S. because the country needs to attract some $1.5 billion a day to fund its current account deficit, which is largely made up of trade in goods and services. With foreign direct investment into the U.S. having tailed off significantly, the U.S. relies largely on foreign purchases of stocks and bonds to fund its deficit.</br></br>But with the White House finding itself increasingly isolated in the court of world opinion for its tough stance towards Iraq, global distaste for risk is on the rise, making it more difficult for the world's largest economy to attract the funding to meet its deficit financing needs.</br></br>Late yesterday in New York, the euro was trading at $1.0819, up from $1.0747 late Tuesday. The dollar was valued at 118.30 yen, down from 118.74 yen. Against the Swiss franc, the dollar was worth 1.3572 francs, down from 1.3682 francs Wednesday, while the pound was changing hands at $1.5936, down from $1.5967.