Current Account

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Current Account

The The Current Account summarizes the flow of goods, services, income and transfer payments into and out of the country. The report acts as a line-item record of how the domestic economy interacts with rest of the world. The Current Account is one of the three components that make up a country's Balance of Payments (Financial Account, Capital Account and Current Account), the detailed accounting of all international interactions. Where the other side of the Balance of Payments, Capital and Financial Accounts deal mainly with financial assets and investments, the Current Account gives a detailed breakdown of how the country intermingles with rest of the global economy on a non-investment basis - tracking good and services.

Current Account Reports by Country

Technical Definition of Current Account - Surpluses and Deficits
The Current Account tracks the trade balance (exports and imports for goods and services), income payments (such as interest, dividends and salaries) and unilateral transfers (aid, taxes, and one-way gifts). A positive value (current account surplus) indicates that the flow of capital from these components into the country exceeds the capital leaving the country. A negative value (current account deficit) means that there is a net capital outflow from these sources.

FX Ramifications of Current Account Developments
Persistent Current Account deficits may lead to a natural depreciation of a currency, as trade, income and transfer payments usually reflect the domestic currency leaving the country to make payments in a foreign currency (just as underlying surpluses act as an appreciating weight). Although, such depreciating weight may be offset by capital flows into the country - capital flows in the form of deposits in stock, bond, real-estate markets and other investments.

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