bcp901

like what Audrey said, current acct + financial acct = 0 (there is not reserve since it’s a floating system)
This equation must hold at all time since it describes the supply and demand of the domestic currency. When financial acct goes up, there must be an equal decrease in current acct at the same time.
For example, when foreigners want to invest $50B the U.S. (financial acct surplus for U.S.) they first need to have US dollar of $50B. And the only way to get that $50B is to sell $50B worth of goods (current acct deficit, from the US perspective) to the U.S.