chandsingh

It wont let me edit... anyway, the mistake was hopefully obvious and I've fixed it up below.

yeah this is counter-intuitive but just remember 'follow the cash'. CA + KA + OSA = 0. So say CA decreases 100 (i.e. net 100 cash has flowed out) and KA has increased 50 (i.e. net 50 has flowed in). Since 100 has flowed out and only 50 flowed in, the gov't holdings of foreign currency will have to fall by 50. But if we plug in the -100 CA and +50 KA into the equation above, OSA has to be +50 to get it to balance. Hope this helps.