Wider Trade Gap Undermines Dollar

The dollar fell broadly Wednesday, suffering its biggest oneday drop against the yen in seven weeks, after the government reported the U.S. trade deficit jumped in July to the highest level in eight years.

Traders were especially caught off guard by a big increase in the U.S. deficit with Japan after months of steady shrinkage.

The deficit with Japan in particular is a sensitive American political issue, and the dollar’s recent rise against the yen has aroused concern by U.S. exporters who fear it will discourage Japanese purchases of American goods.

Exchange Currency in Dollars Dollar in foreign currency

Canada .7291 1.3716

France .1946 5.1385

Germany .6626 1.5091

Great Britain 1.5603 .6409

Italy .000656 1523.50

Japan .009162 109.15

Mexico .133583 7.4860