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But there is also an upside: a weak dollar could prove beneficial to the American economy by aiding long-suffering manufacturers, rebuilding a stronger industrial base and lifting exports even if it makes life harder for trading partners around the world, especially in Europe.
“As long as it doesn’t crash, a gradual, orderly decline is healthy,” said C. Fred Bergsten, director of the Peterson Institute for International Economics. “The dollar went up 40 percent between 1995 and 2002, so this is a necessary rebalancing.”
NEW YORK - The US trade deficit unexpectedly narrowed in August as exports climbed to the highest level of the year and oil imports plunged.
The gap fell 3.6 percent to $30.7 billion from a revised $31.9 billion in July, the Commerce Department said yesterday in Washington. The 0.2 percent increase in demand for American-made goods abroad would have been larger excluding a drop in aircraft shipments, which tend to be volatile.
More than $2 trillion in government stimulus programs are reviving demand from Asia to Europe, ensuring that US factories benefit from growing sales overseas as the dollar weakens. Production gains and the need to replenish depleted inventories mean imports will probably also grow, preventing the deficit from narrowing further.
The dollar has been declining relative to other major currencies for months, and this week there has been a wave of worry that foreign investors might curtail their investments in dollar assets. But so long as the slide remains gradual and orderly, as it has so far, economists generally view it as a plus for the U.S. economy. While it makes imported goods such as oil more expensive, it makes U.S. exporters more competitive, helping rebalance an economy that has been skewed away from exports for years.
In August, the gap between what the United States exports versus its imports narrowed to $30.7 billion, from $31.9 billion, as exports rose and imports fell, the Commerce Department said Friday. The dollar rose 0.5 percent versus other major currencies Friday, as investors interpreted a Thursday night speech by Federal Reserve Chairman Ben Bernanke to suggest that the central bank could raise interest rates in the not-too-distant future.
20.10.2009 kl 05:34 | IDG News Service
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Well it might not be time to break out the bubbly just yet but US high-tech exports totaled $223 billion in 2008, up one percent from $220 billion in 2007 continuing a trend that has seen tech exports rise 38% since 2002. The number represents the single largest export sector in the country, accounting for 17% of the total US exports.
Oct. 22 (Bloomberg) -- Ford Motor Co. is moving production of a small sport-utility vehicle from Europe to the U.S. to take advantage of lower labor costs and the weaker dollar, according to three people familiar with the plan.
Ford in October 2011 will shift the Kuga model to Louisville, Kentucky, from a factory in Saarlouis, Germany, said the people, who asked not to be identified because the plan is private. As many as 80,000 a year will be exported to Europe, one of the people said. The dollar has fallen 18 percent against the euro this year, lowering the cost of U.S.-made goods.