Foreign exchange and trade

Balance of payments. Current account. Capital account. Currency reserves and speculative attacks.

In this tutorial we will see how trade and assets (including money) changing hands are fundamentally intertwined. Not only that, but we will see how this can be accounted for through the capital account (assets changing hands) and current account (trade).

This tutorial delves into how and why countries (usually their central banks) would want to keep other countries' currency in reserve. It then goes into why this sometime leaves the reserve-holding country open to a speculative attack (this is seriously high drama).