Market Impact:High
Current account balance

This report is issued quarterly and it states the size of a country’s surplus or deficit. A country running a deficit is a net borrower, means it has more outgoing assets than incoming or it invests more than it saves. Importing goods or services requires the importing country to pay for incoming goods so money is debited in exchange for those goods. Investments overseas by a country would also contribute to its deficit because the outward flow of assets is debited from its piggy bank. Currencies of countries running a deficit tend to weaken because the ultimate destination of its currency would be in the middle of nowhere. When exporting or investing overseas, the importing country’s local currency has to be sold in order to purchase the good from the exporting country.

A country that runs a surplus would see its currency rise in value relative to another currency. An economy running a surplus means that it has more incoming flow of assets than outgoing. Remittances from overseas and exports are obviously money going into their piggy banks. Countries running a surplus are providers or net lenders to the rest of the world. They provide the resources needed by countries running a deficit.

Depending on your conclusion, neither surplus nor a deficit would register a generic effect on a country’s currency. A country running a deficit could either see its currency rise or fall in value so as a country running a surplus. This is not the only factor influencing a currency’s strength as neither a surplus nor a deficit is really bad for an economy (this all depends on which side you’re at).

A country running a deficit could also mean that it needs more external resources to power its high capacity economy that local resources alone are not enough to fuel its economic growth. It’s like a fat guy craving for some more pizza and had some delivered from Antonita's Pizza Place because the ones he baked wasn’t enough for him. Therefore, if this is the case then its currency should also strengthen.

A surplus could also mean that its economy is anorexic that it cannot consume more than what it has so its excess resources has to go somewhere else. But on the bright side it is earning more relative to what it needs to consume and those extra resources sold means that its currency is being bought to use as payment.




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