Current account deficit (CAD) quick points ( asked in upsc interview ) CAD turns surge in demand of foreign currency i.e more domestic currency surrendered to purchase foreign currency. That leads to cheap export products and expensive imports. The account is maintained by the federal bank (RBI in case of india). Payment that are accounted in current account 1)Balance of trade (EX-IM) 2)Balance of Invisible(Services) 3)Net Factor Income from abroad 4)All cash transfers (Do not include those transaction which creates assets or liabilities in foreign country ex: purchase of share from tokyo stock exchange or buying credit from foreign institutions ) 5)Domestic currency loosing value against reserve currency
Posted on: Sun, 25 Jan 2015 06:03:36 +0000
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