An important fundamental factor for online forex traders are the account balance for a country, strongly effecting foreign exchanges rates in the long term (6 months to 3 years).
What is Current Account Balance?
The account balance summarize the flow of goods, services, income and transfer payments into and out of a certain country. It 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). Positive values indicates inflow of capital while negative values means that capital are leaving the country.
It is a record for how a countries economy interact with other regions. The balance is the total amount of money in a certain account, equal to the net of credits & debits at a defined time period. Countries strive to have a positive trade balance, or trade surplus, exporting more than importing.
Why is trade balance important for online forex traders?
Countries with positive trade balance require traders to buy the local currency, increasing the value against the other currency. On the other hand, an unfavourable current account balance is known as a trade deficit, which tend to lower the local currencies value against the major trading partners.
Below you find a table over countries with the best current account balance (more…)
