CFA Latest CFA Level 1 Discussions Positive account surplus leads to an expectation of the currency of that country to strengthen. WHY?

Positive account surplus leads to an expectation of the currency of that country to strengthen. WHY?

  • This topic has 1 reply, 2 voices, and was last updated Aug-17 by Knath87.
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    • Alta12
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      Demand for the currency due to export payments? Or strong economy?

      Thanks.

    • Knath87
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      Due to an increased exports, the demand for the domestic currency (exporter) increases.. This leads to appreciation in short term.. In the long term, this might lead to correction as the competitiveness of domestic goods decreases due to high cost to nations importing from the exporter..
      I hope this clarifies..

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