If a nation has a balance of payments deficit and exchange rates are flexible, the price of that nation's currency in the foreign exchange markets will rise.

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When a nation has a balance of payments deficit, it means that it is spending more on imports than it is earning from exports. This will lead to a decrease in demand for the nation's currency in the foreign exchange markets, causing its price to fall instead of rise. In flexible exchange rate systems, market forces determine the value of a currency, and a balance of payments deficit will put downward pressure on the currency's value.

If a Nation Has a Balance of Payments Deficit and Exchange