Capital Account
Increase in foreign ownership of domestic assets – increase in domestic ownership of foreign assets + portfolio investment (stocks, bongs) + other investment (loans, bank accounts). This measures money flowing into and out of a country because of capital flows. If a country is doing well, then money will flow into that country, and these flows are reflected in the capital account. When there are strong inflows or outflows of capital, the currency will be affected.
→ EXAMPLE:
Large inflows = currency value will go up.
Large outflows = currency value will go down.
→ NOTE:
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Study Guide >> Forex Market Concepts >> Capital Account
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