A capital outflow causes the exchange rate to depreciate and results in a current account deficit.

Name: A capital outflow causes the exchange rate to depreciate and results in a current account deficit.
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A capital outflow typically leads to a depreciation of the exchange rate, but it can improve the current account balance by making exports cheaper and imports more expensive, potentially reducing a current account deficit or turning it into a surplus.

A Capital Outflow Causes the Exchange Rate to Depreciate and Results