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Trade gap narrows on weak US dollar

WASHINGTON - The falling dollar led more foreigners to buy American in August, helping to push the trade deficit down to the lowest point in seven months. That was welcome news for the Bush administration as it tries to deal with a Congress unhappy over huge trade imbalances and 3 million lost factory jobs.

The Commerce Department reported that the trade deficit declined to $57.6 billion in August, down 2.4 percent from July. It was the lowest gap between exports and imports since January and a much better showing than had been expected.

The improvement reflected a 0.4 percent rise in exports, which climbed to a record $138.3 billion, as the decline in the value of the dollar against many foreign currencies boosted sales of American farm products, industrial supplies, and consumer goods to all-time highs. A weaker dollar makes the cost of imports and foreign trips more expensive for Americans, but makes American products cheaper overseas.

Imports actually dropped by 0.4 percent to $195.9 billion, reflecting lower shipments of foreign cars and furniture, which offset a big increase in the foreign oil bill, which rose to the highest level in a year, as the price of a barrel of imported crude hit an all-time high.

The politically sensitive trade deficit with China fell by 5.3 percent to $22.5 billion but remained on track to surpass last year's record figure, a development that is causing heartburn in Congress.

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