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What is the balance of payments? A country's money in and out

By SendPay Business · · 2 min read

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The balance of payments is a record of all the money flowing between a country and the rest of the world over a period. It covers trade, income, transfers and investment, and it helps explain why currencies rise and fall.

The main parts

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Current account

trade in goods and services, income from investments abroad, and transfers such as money sent home by workers.

Capital account

smaller items such as some transfers of assets.

Financial account

investment flows, such as buying foreign companies, shares or bonds.

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What a deficit means

A current account deficit means a country is spending more abroad than it earns from abroad. It has to be paid for by money coming in through the financial account, such as foreign investment or borrowing. In principle, the accounts balance out overall, which is where the name comes from.

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Why it matters for currencies

A country with a large current account deficit relies on foreign money flowing in. If investors lose confidence and that money slows, the currency can fall. A persistent surplus can have the opposite effect. Traders watch these figures alongside interest rates and growth.

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Where SendPay fits

SendPay platforms let customers hold GBP, EUR and USD and exchange between them at a fee the platform owner sets, powered by licensed partners. SendPay doesn't offer trading.

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How it works

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SendPay Business is a technology company, not a bank. Accounts, cards and payments are powered by licensed partners.

Questions people ask

What does a devaluation do to prices?

See how a weaker currency changes import costs.

Currency devaluation calculator →
What is an exchange rate?

The price of one currency in terms of another.

Exchange rates →
How do interest rates affect exchange rates?

Higher rates can attract foreign money and lift a currency.

Interest rates and currencies →
What is currency devaluation?

A deliberate cut in a currency's value against others.

Devaluation →

Read next

Spotted a mistake or something out of date? and we'll fix it. How our guides are made

This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.