New Zealand Q4 current account deficit rises slightly larger than expected

Not impacting NZD/USD upon release.

The current account represents the most comprehensive gauge of a nation’s international financial interactions. It encapsulates not just the exchange of goods and services, but also earnings from foreign investments and payments made on investments from abroad within NZ. In addition, it covers transfers like overseas aid and remittances.

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More on the “current account”

• refers to a component of a country’s balance of payments that measures the flow of goods, services, investment income, and unilateral transfers (such as remittances and foreign aid) between the country and the rest of the world.
• The current account is divided into several categories:
• Trade Balance: The value of exported goods minus the value of imported goods.
• Net Exports/Imports of Services: Such as tourism, software services, etc.
• Net Investment Income: Includes income from assets held overseas, such as dividends and interest, minus similar payments made to foreign investors who own assets in the country.
• Unilateral Transfers: Transfers that don’t involve a quid pro quo, such as remittances, foreign aid, grants, etc.
• A positive current account balance indicates that a country is exporting more than it is importing, effectively lending to the rest of the world. Conversely, a negative current account balance means that a country is importing more than it is exporting and is thus borrowing from other countries. The current account, together with the capital and financial accounts, make up a country’s balance of payments, providing a comprehensive view of a country’s economic transactions with the rest of the world.

This article was written by Eamonn Sheridan at www.forexlive.com.