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Dollar and Stocks Drop As Oil Nears $100 Per Barrel

The price of oil briefly touched $98 a barrel Wednesday while the dollar continued its decline and the average stock market fell two percent. One expert sees a direct relationship between the dollar's decline and the price of oil.

Ted Truman, researcher at Washington's Peterson Institute of International Economics, says the advance in the oil price is directly connected to the dollar's decline.

"Yes, because the true price of oil is in barrels, the faster the dollar goes down the faster the dollar price of oil will go up," said Ted Truman. "That's the arithmetic."

Oil has long been priced in dollars. Its steady advance over the past two months has coincided with the dollar's equally steady decline.

Some stock market analysts are also drawing a connection between the dollar's weakness and Wall Street. Carter Worth is the chief technical analyst at Oppenheimer brokerage in New York. He points out that foreign investors have trouble making money on Wall Street when their foreign currencies are rising against the dollar.

"At some point, the weak dollar scare foreign buyers of financial assets in this country," said Carter Worth. "And that is the risk to our economy. They pull away from the bonds and the bond market. They pull away from our financial assets. You may make money in a US stock but you're going to lose all your money in the currency trade. It is increasingly worrisome."

Worth spoke on CNBC Television. The dollar traded at another record low Wednesday at $1.46 against the Euro. It closed at $2.10 against the British pound.

Truman said he believes the US Treasury is remaining silent about the dollar's decline in large part because any statement in support of the currency probably would have little effect on the weak dollar.

"I'm sure that the Treasury Department would be more comfortable if the adjustments in these markets were not as volatile and as one way as they have been," he said.

In New York, the Dow Jones industrials index was down two percent Wednesday, losing 360 points to 13.300. Reflecting continuing trouble in the housing credit markets, financial institutions led the way lower.
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Question 1
According to the experts, which of the following is directly connected to the advance in the oil prices?
A. The Global WarmingB. The drop in stock market
C. The dollar's declineD. none of the above
Question 2
What is the relationship between the oil prices and the dollar price?
A. when the dollar goes down the price of oil will go downB. when the dollar goes down the price of oil will go up
C. when the dollar goes down the price of oil will remain sameD. there is no relationship
Question 3
Which of the following is related to The Wall Street?
A. CNBC TelevisionB. Treasury Department
C. International Economics InstituteD. Stock market
Question 4
On Wednesday, how much did the dollar close at against the British pound?
A. $1.46B. $3.10
C. $2.10D. $1.10
Question 5
How much the Dow Jones industrials index dropped on Wednesday?
A. 3%B. 1.2%
C. 13%D. 2%
Question 6
Where does Ted Truman work?
A. Wall StreetB. Treasury Department
C. Washington's Peterson InstituteD. CNBC Television
Question 7
Where is the Oppenheimer Brokerage located?
A. New YorkB. Washington
C. EnglandD. Dow Jones
Question 8
What is Euro?
A. A cityB. A kind of currency like dollar
C. An indexD. A job like researcher
Question 9
Why does Truman believe the US Treasury is silent about the dollar's decline?
A. because he thinks that any statement in support of the currency probably would have little effect.B. because he thinks that any statement in support of the currency probably would have a great negative effect.
C. because he thinks that it is dangerous to make any statement about money.D. because he thinks that it is futile to make dollar strong.
Question 10
What kind of job does Ted Truman have?
A. Chief technical analystB. TV Anchorman
C. Stock brokerD. Researcher
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