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Basic Balance

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Definition of 'Basic Balance'

An economic measure for the balance of payments that combines the current account and capital account balances. The basic balance represents an alternative approach to the surplus or deficit for the balance of payments under pegged exchange rate systems.
Investopedia Says

Investopedia explains 'Basic Balance'

Economists use the basic balance to help determine long-term trends in a country's balance of payments. The measure is less sensitive to short-run fluctuations in the interest or exchange rates, providing insight for the long term. The basic balance incorporates international investment fluctuations from the capital account, making it more responsive to long-term changes in a nation's productivity.

Articles Of Interest

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    Understanding Capital And Financial Accounts In The Balance Of Payments

    The current, capital and financial accounts compose a nation's balance of payments.

  2. What Is The Balance Of Payments?

    Countries track money coming in and going out through something called the balance of payments. Learn more here.

  3. Current Account Deficits: Government Investment Or Irresponsibility?

    Deficit can be a sign of trouble for some countries, and of health for others. Find out what it means when more funds are exiting than entering a nation.

  4. Understanding The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.

  5. Why China's Currency Tangos With The USD

    Congress often debates pressuring China to appreciate its currency, but the yuan/dollar peg has benefits for both countries.

  6. America's Loss Is The Currency Market's Gain

    The Smithsonian Agreement hurt the U.S. in the short-term, but was necessary in furthering real market-driven exchange rates.

  7. A Primer On Currency Regimes

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  8. Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.

  9. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency exchange rates can be floating, in which case they change continually ...

  10. How Inflation-Fighting Techniques Affect The Currency Market

    Central banks use these strategies to calm inflation, but they can also provide longer-term clues for forex traders.
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