How can a country with a Current Account deficit can have an exchange rate appreciating and viceversa a Current Account surplus and a currency depreciating?

  • $\begingroup$ A country running a current account deficit is importing more than it is exporting. Hence, a current account deficit should cause the value of the domestic currency to fall. This will make exports cheaper and imports more expensive, balancing the current account. $\endgroup$ Apr 2 at 15:29
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    $\begingroup$ there are many examples of countries with CA deficit and FX appreciating , see just the US post covid with a stronger USD $\endgroup$ Apr 3 at 23:22
  • $\begingroup$ True. In fact, the U.S. has not run a current account surplus since about the 1980s, with a single spike during the 1990s. tradingeconomics.com/united-states/current-account $\endgroup$ Apr 4 at 10:01


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