Fundamentals of Foreign Exchange: International Balance of Payments

　　International balance of payments refers to the balance of payments formed by economic transactions between a country and other countries. It is one of the most important fundamental indicators in the foreign exchange market, directly related to a country's exchange rate and economic development.

　　The international balance of payments mainly includes three aspects: current account, capital account, and financial account.

　　The current account mainly reflects the trade balance of a country, including trade in goods, trade in services, and transfer of income and expenditure. If the current account surplus, it means that the country's exports are greater than imports, which means that the country's Demand for money will increase and the exchange rate will appreciate; On the contrary, it will lead to a depreciation of the exchange rate.

　　The capital account mainly reflects the capital flow situation of a country, including direct investment, securities investment, and other investments. If there is a surplus in the capital account, it means that the inflow of foreign capital in the country is greater than the outflow of foreign capital, which means that the Demand for money of the country will increase and the exchange rate will appreciate; On the contrary, it will lead to a depreciation of the exchange rate.

　　Financial accounts mainly reflect a country's lending relationship with foreign countries, including international reserve assets, loans, and deposits. If the financial account is in surplus, it means that the borrowing income of the country is greater than the borrowing expenditure, which means that the Demand for money of the country will increase and the exchange rate will appreciate; On the contrary, it will lead to a depreciation of the exchange rate.

　　Overall, a country's balance of payments situation has a significant impact on its exchange rate. In the foreign exchange market, investors need to closely monitor changes in the balance of payments of various countries in order to adjust their investment strategies in a timely manner and achieve greater investment returns.