The US current account deficit widened more than expected in the first three months of 2004 to a new record, pushed by the growing gap between imports and exports, government data showed today.
The larger-than-expected gap renewed downward pressure on the dollar in early trading against the euro, and boosted gold prices as investors turned to the metal as a safe haven.
The gap in the current account balance, the broadest measure of the nation's trade with the rest of the world, increased to $144.9 billion in the first quarter from a revised $127.0 billion in the last three months of 2003, the Commerce Department said.
The current account deficit has been blamed for weakening the dollar against other currencies, as Americans import more than they export and borrow from the rest of the world to make up for the shortfall in their domestic savings.
Much of this gap has been filled by official foreign purchases of US government bonds, as countries like China and Japan snapped up dollar-denominated assets during massive intervention campaigns to weaken their currencies against the US currency.
Official foreign purchases of US assets rose $125.2 billion in the first quarter following an increase of $83.7 billion in the fourth. Total foreign-owned assets jumped $447.6 billion in the first quarter, after a $230.3 billion rise in the fourth.
US-owned assets abroad climbed $289.3 billion, after a $61.6 gain in the previous quarter, the report showed.
The US dollar fell 3 percent in the first quarter on a trade-weighted basis against a group of 7 major currencies, the Commerce Department said, compared to previously reported decline of 12 percent for all of 2003.