This page covers topics related to international trade – the balance of payments and the exchange rate. We explain each concept and provide data on them for the UK and for some other countries.
Balance of Payments
Nations trade with each other in (a) goods and services and (b) financial assets (such as government bonds, shares) and real estate. The balance of payment summarises these transactions. Here we explain the meaning of the two broad components of the balance of payments and provide data on the UK and other countries.
Countries who have different currencies and who trade with each other will need to swap currencies. The exchange rate is the rate at which they do so. This page explains how exchange rates are defined, and the difference between nominal and real exchange rates. It also explains the difference between fixed and floating exchange rates.
Commentary - International Variables
The commentary reviews the behaviour of the current account in the UK and US over the last 60 years and that of other countries more recently. It also presents evidence on the behaviour of many countries’ exchange rates against the dollar, noting the recovery in the value of the US$ following the financial crisis.