Question

What is the Balance of Payment (BOP)? How does BOP and the balance of trade affect the exchange rate. Discuss the impact of BOP (pre and post October 2019 crisis) on the Lebanese economy and exchange rate

Answer 1

The balance of payments is an announcement of all exchanges made between elements in a single nation and the remainder of the world over a characterized timeframe, for example, a quarter or a year.

• The balance of payments incorporates both the present record and capital record. The present record incorporates a country's net exchange products and enterprises, its net profit on cross-outskirt ventures, and its net exchange installments.
• The capital record comprises of a country's imports and fares of capital and remote guide.
• The whole of all exchanges recorded to be determined of installments ought to be zero; in any case, conversion scale changes and contrasts in bookkeeping practices may upset this practically speaking.

Impact

The balance of payments is an announcement of all exchanges made between elements in a single nation and the remainder of the world over a particular time period, for example, a quarter or a year. Two elements are in play which connect a nation's parity of installment and changes in the estimation of its cash: the market for every single monetary exchange on the global market (parity of installments) and the gracefully and interest for a particular money (swapping scale).

The balance of payments impacts money trade rates through its impact on the flexibly and interest for outside trade. At the point when a nation's exchange account doesn't net to zero—that is, when fares are not equivalent to imports—there is generally more gracefully or interest for a nation's cash, which impacts the cost of that money on the world market. The equalization of installments doesn't affect the conversion scale in a fixed-rate framework since national banks alter cash streams to balance the worldwide trade of assets.

Lebanese economy

The Balance of Payments shortfall widened at a quicker pace after 2019. This was primarily the consequence of declining current record shortfall, balance of payments biggest constituent, in spite of the advancement of the capital and money related record and that of the unrecorded exchanges. In subtleties, the present record balance stayed under the strains of the lessening the travel industry action as slight degrees of receipts vigorously affected the equalization of administrations.