Balance of Payments

The balance of payments is a country's complete record of economic transactions with the rest of the world over a period, split into the current account (trade in goods and services, income, transfers) and the capital and financial account (investment flows, loans, reserve changes). By construction the two sides offset, so a current-account deficit is financed by net capital inflows. Currency analysts read the balance of payments to understand structural pressure on an exchange rate: an economy that persistently imports more than it exports depends on foreign financing, and its currency can weaken if those inflows slow. Central banks also publish reserve movements here, revealing past intervention.