Balance of Trade
The difference between a country exports and imports, a gauge of currency demand.
Quick answer
The balance of trade is exports minus imports, a measure of trade flows that supports or pressures a currency.
Definition
The balance of trade is the difference between what a country exports and what it imports. A surplus means more is sold abroad than bought, which tends to support the currency. It is one of the inputs traders watch because trade flows influence exchange rates.
How It Works
- Surplus = more exports than imports
- Trade flows affect currency demand
- It is published as part of economic data
Trading Tips
1
Read it alongside the current account
2
Expect a larger market reaction on surprises
3
Pair it with central bank policy for the fuller picture
Related Terms
Start Trading
Put Your Knowledge Into Practice
Compare regulated brokers and find the best one for your trading style.