what is the current account 
the current account records a nation s transactions with the rest of the world specifically its net trade in goods and services its net earnings on cross border investments and its net transfer payments over a defined period such as a year or a quarter the current account deficit of the united states in q2 of 2023 was negative 212 1 billion 1investopedia matthew collinsunderstanding the current accountthe current account is one half of the balance of payments the other half being the capital account while the capital account measures cross border investments in financial instruments and changes in central bank reserves the current account measures a country s current account balance may be positive a surplus or negative a deficit in either case the country s capital account balance will register an equal and opposite amount exports are recorded as credits in the balance of payments while imports are recorded as debits a positive current account balance indicates that the nation is a net lender to the rest of the world while a negative current account balance indicates that it is a net borrower a current account surplus increases a nation s net foreign assets by the amount of the surplus while a current account deficit decreases it by the amount of the deficit in keeping with double entry bookkeeping any credit in the current account such as an export will have a corresponding debit recorded in the capital account the item received by the nation is recorded as a debit while the item given up in the transaction is recorded as a credit special considerationssince the trade balance exports minus imports is generally the biggest determinant of the current account surplus or deficit the current account balance often displays a cyclical trend during a strong economic expansion import volumes typically surge if exports are unable to grow at the same rate the current account deficit will widen conversely during a recession the current account deficit will shrink if imports decline and exports increase to stronger economies the exchange rate exerts a significant influence on the trade balance and by extension on the current account an overvalued currency makes imports cheaper and exports less competitive thereby widening the current account deficit or narrowing the surplus an undervalued currency on the other hand boosts exports and makes imports more expensive thus increasing the current account surplus or narrowing the deficit nations with chronic current account deficits often come under increased investor scrutiny during periods of heightened uncertainty the currencies of such nations often come under speculative attack during such times this creates a vicious circle in which foreign exchange reserves are depleted to support the domestic currency and this foreign exchange reserve depletion combined with a deteriorating trade balance puts further pressure on the currency embattled nations are often forced to take stringent measures to support the currency such as raising interest rates and curbing currency outflows current account vs capital accountsome countries will split the capital account into two top level divisions i e the financial account and the capital account in this context the financial account measures an increase or decrease in international ownership of assets while the capital account measures financial transactions that do not affect income production or savings 