Balance of trade
Balance of trade shows a country's deficit or surplus in its trading activity with other countries. If a country imports more goods than it makes locally for export, then the country has a trade deficit. A trade surplus is when there are more exports than what the country imports. The calculation involves the movement of goods such as automobiles, oil and other consumer goods.. A country's currency is affected by this balance since a country that exports more would mean that its currency will rise due to high demand. The importing country would have to sell its currency in exchange for the exporting country's currency to pay the manufacturers on the exporting end.