1
$\begingroup$

When the Current Account (CA) is in deficit it means there is less demand for a currency than supply so it should theoretically depreciate but sometimes this does not hold. When a country with CA deficit sees its currency appreciating what could the be the driver, assuming the central bank does not intervene? An example could be the USD appreciating in 2022-2023 despite CA deficit and obviously the Fed not intervening.

$\endgroup$
1
  • $\begingroup$ The current account has very little to do with FX rates. In fact most theories don't even look at the current account at all. See here for a decent summary of FX rate determination theories. $\endgroup$
    – AKdemy
    Jan 29 at 20:40

0

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.