🌐 International Investment Position (IIP) — The Net Worth of a Nation
💡 The Lesson
Every country has a balance sheet — just like a company or a trader.
It’s called the International Investment Position (IIP), and it shows whether a nation is a net creditor or a net debtor to the rest of the world.
Over time, this quietly shapes currency strength or weakness.
📊 What Is IIP?
The International Investment Position measures:
What a country owns abroad − What foreigners own in that country
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Positive IIP → the country owns more foreign assets than foreigners own domestic assets
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Negative IIP → foreigners own more of the country than the country owns abroad
Assets include:
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Foreign bonds
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Stocks
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Direct investments
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Reserves
🏦 Why IIP Matters for Forex
1️⃣ Positive IIP = Structural Currency Strength
Countries with positive IIP receive income from abroad (interest, dividends).
This creates steady demand for their currency.
2️⃣ Negative IIP = Vulnerability
Countries dependent on foreign capital must keep attracting investors.
If confidence drops → capital leaves → currency falls fast.
📈 Examples:
🇯🇵 Japan
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Large positive IIP
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Strong overseas asset ownership
→ JPY supported during crises (safe-haven behavior)
🇺🇸 United States
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Deeply negative IIP
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Relies on foreign capital inflows
→ USD strong short term, structurally pressured long term
🇦🇺 Australia
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Persistent negative IIP
→ AUD sensitive to global risk sentiment
⚙️ Pro Tip — Combine IIP with Current Account
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Positive IIP + Current Account Surplus = strong, resilient currency
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Negative IIP + Current Account Deficit = fragile currency
This combo explains why some currencies collapse during global stress while others hold firm.
🚀 Takeaway
IIP is the long-term scorecard of global trust.
Countries that own the world are less dependent on capital inflows.
Countries owned by the world must constantly prove themselves.
In forex, short-term moves come from sentiment —
but long-term strength comes from net ownership.
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