Current Account
Current account measures money flowing into and out of a country as a result of trade flows. It can be measured through the following formula:
→ FORMULA:
[Exports – Imports = BOT] + Net Factor Income From Abroad (interest, dividends) + Net Transfer Payments (aid to other countries)
Surplus: generally strengthens currency
Deficit: generally weakens currency
The value of currency theoretically should increase or decrease depending on whether there is a surplus or a deficit.
→ NOTE:
http://www.informedtrades.com/24555-measuring-trade-flows-move-currencies-current account.html
Study Guide >> Forex Market Concepts >> Current Account