Friday, June 24, 2011

SHOW ME THE MONEY! Or at least where it is going. A nice interactive on Remittances world-wide from the Financial Times.

The Financial Times has a terrific interactive that show the changes in inflows and outflows of "remittances".  Remittances are the flows of currencies in and out of a country. They are a part of the Balance of Payments calculation maintained by the government (go HERE for the latest report). The Balance of Payments has two main accounts: The Current Account and The Capital Account. Remittances are part of the Current Account, specifically in the category "Unilateral Net Transfers".    
Source: The Finacial Times
 Example: If a "foreigner" living/working in the US sends (remits) dollars to their home country (presumably exchanged for the local currency) that is recorded as a DEBIT (subtraction) in the Current Account.  If an American living/working in a foreign country sends the local country back to the US (presumably exchanged for dollars) that transaction is recorded as a CREDIT (addition) in the Current Account. As you might expect, the net balance of remittances for the US is negative (more dollars leaving to go to the Foreign Exchange Market (FOREX) than there are returning from the FOREX)...

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