🌍 Trade Balance — How Imports and Exports Move Currencies
💡 The Lesson
Every country trades goods with the rest of the world — and that flow of money in and out shapes its currency’s strength.
When exports rise, demand for that country’s currency increases.
When imports dominate, money flows out — and the currency weakens.
📦 What Is the Trade Balance?
The Trade Balance measures the difference between a country’s exports and imports:
Trade Balance = Exports – Imports
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Surplus → Exports > Imports → money flows in → stronger currency.
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Deficit → Imports > Exports → money flows out → weaker currency.
Example:
If Japan exports more cars and electronics than it imports oil or raw materials, it runs a surplus → JPY tends to strengthen.
🏦 Why It Moves the Market
A country with strong exports earns more in its own currency.
That means higher demand for that currency globally.
Meanwhile, a country that imports heavily must sell its own currency to buy foreign goods — creating selling pressure.
⚙️ Pro Tip — Watch Commodity Nations
Countries like Canada (CAD) and Australia (AUD) rely on exports of oil, gold, and minerals.
If global demand for those commodities rises → their currencies rise.
If demand drops → their currencies fall.
📊 Example:
Oil prices rise → Canada’s export revenue jumps → CAD strengthens.
China slows down → Australia exports less iron ore → AUD weakens.
🚀 Takeaway
The trade balance is the economy’s mirror — it shows who’s buying from whom.
When you understand how money flows between countries, you can predict which currencies are likely to gain strength.
Follow exports, follow demand — and you’ll follow the smart money.
📢 Join my MQL5 channel for more forex fundamentals and real-world insights:
👉 https://www.mql5.com/en/channels/issam_kassas
