Current Account – What is a Current Account in forex?

What is a Current Account?

Definition of Current Account: It is defined as the sum of balance trade of a nation, factor income like dividends and interest, transfer payments like foreign assistance. Generally, the most important part of this account is the figure of balance of trade. As far as the subject known as economics is concerned, this account is regarded as one among the two main components of the balance of payments of a nation. The other component is known as capital account. The balance of this specific account when combined with the total capital offers a measure of foreign trade of the nation. A current account raises the value of foreign assets of a country by the equivalent amount and an existing account deficit is responsible in doing the reverse task. Both the private and government payments are also incorporated in the result. It is called as current account as services and goods are generally used in the existing time period. The existing account shortage stands at nearly 5% of the GDP of about $14.2 trillion. Most of the experts say that this specific deficit is not maintained and the unwinding of the deficit can threaten the prosperity globally.