payments deficit

How Can A Country Run An Overall BoP Deficit Or Surplus?

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How Can A Country Run An Overall BoP Deficit Or Surplus? Answer: A country can run an overall BOP deficit or surplus by engaging in the official reserve transactions. For example, an overall BOP deficit can be supported by drawing down the central bank’s reserve holdings. Likewise, an overall BOP surplus can be absorbed by

How Does Interest Rate Affect Balance Of Payment?

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How Does Interest Rate Affect Balance Of Payment? On the one hand, lower interest rates encourage consumer spending; therefore there will be a rise in spending on imports. This will cause a deterioration in the current account. However, lower interest rates should cause a depreciation in the exchange rate. How does interest affect your payments?