Balance of Payments (BOP)
and exchange rates
• Who pays attention to BOP?
– Business owners, politicians, economists, and anyone
affected by interest rates, exchange rates, or the stock and
• Why do they care?
– BOP figures affect currency values, interest rates,
government policy, trade, fiscal & monetary policies
– Volume and volatility of stocks, bonds, & currencies are
significantly higher on days when BOP data are released
– BOP data are among the few tools that work for explaining