Reply #17: US external deficit bulges to record, fear grows for dollar

[54anickel]

http://story.news.yahoo.com/news?tmpl=story&cid=1518&ncid=1518&e=1&u=/afp/20041216/bs_afp/useconomyaccount_041216222220

WASHINGTON (AFP) - The United States posted a record external deficit for the third quarter of 2004, exacerbating fears of a brutal dollar plunge.


The deficit in the current account -- trade in goods and services, investment returns and one-way financial transfers -- expanded to 164.7 billion dollars from 164.4 billion in the second quarter, the Commerce Department (news - web sites) said.


The deficit was unprecedented, but narrower than the 171-billion-dollar hole predicted by Wall Street economists.

The better-than-expected news helped the dollar gain ground, :eyes: pushing the euro down to 1.3244 dollars late in New York trade from 1.3393 the day before. Analysts, however, fretted over the longer term.

"I think it is very worrisome," said Wells Fargo Banks chief economist Sung Won Sohn.

"I think the outlook is going to get worse, not better," he warned. "I don't see this trend changing any time soon despite the sharp dollar depreciation," he said.


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