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WASHINGTON, June 17 (Reuters) - The U.S. current account deficit shrank in the first quarter to $101.5 billion, the smallest deficit since the fourth quarter of 2001, a Commerce Department report showed on Wednesday.
The deficit declined from an upwardly revised $154.9 billion in the fourth quarter and compared with analysts' forecasts for a first quarter gap of $85.0 billion.
The first quarter deficit equaled 2.9 percent of gross domestic product, a sharp drop from 4.4 percent in the fourth quarter, and the lowest since 2.8 percent in the first quarter of 1999, a Commerce Department official said.
The current account is the broadest measure of total U.S. trade with the rest of the world, covering goods, services and income transfers.
U.S. exports and imports both fell in the first quarter as severe world recession hit consumer demand and crimped trade.
Exports dropped to $509.6 billion, from $591.7 billion in the previous three months, while imports shrank more steeply, to $581.5 billion from $715.1 billion.
All major categories contributed to the decline in exports, with the largest decrease in industrial supplies and materials, which partly reflected declines in chemicals, the Commerce Department said.
More than one third of the drop in total imports was accounted for by petroleum and petroleum products, the Commerce Department said.
The dollar appreciated 5 percent against a broad basket of currencies <.DXY> during the first three months of 2009.
Trade flows can sometimes be affected by foreign exchange fluctuations, as a decline in the value of a country's currency potentially makes its exported goods cheaper, while imports become relatively more expensive. (Reporting by Alister Bull; editing by Neil Stempleman)