Current account surplus cause domestic currency to appreciate? What can this be explained by savings-investment imbalances? Thanks.
I thought rising currenc account deficit is good for domestic currency because that means capital account surplus, which is driven by capital inflow. And capital inflow drive up demand for domestic currency.
On the other hand, current account surplus is good for the economy in the long run for obvious reasons. But that ties to relative economic strength theory.
Am I missing something here.
I thought rising currenc account deficit is good for domestic currency because that means capital account surplus, which is driven by capital inflow. And capital inflow drive up demand for domestic currency.
On the other hand, current account surplus is good for the economy in the long run for obvious reasons. But that ties to relative economic strength theory.
Am I missing something here.