The Factors, Which Influence The Balance Of Payments Of A Country?


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The balance of payments of a country is in essence a record or documentation of said country's transactions with the world. This is basically the transactions that take place between domestic residents and international non-residents. The data is tallied by a constant inspection of transactions, transfers, services, loans, foreign exchanges etc.

The BOP (Balance of Payment) record essentially holds information about all fiscal transactions between it's own country and the rest of the world. This includes exports and imports.

One of the main factors that influence a country's BOP is exchange rates. This is a key component in impacting supply and demand, which alters the dynamics of a country's economy. In addition, factors such as productivity and growth, as well as inflation and foreign exchange bare heavily on the exchange rate of a country, which in turn influences and affects the BOP.

These aspects are amongst the key elements that impact and influence the balance of payments of a country.

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