Balance of Payment BOP. BOP is virtually an accounting identity, as a sources and uses of funds. Sources of funds are those transactions increasing the purchasing power of a nation such as export of goods, services and capital.
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US current account continued to deteriorate since 1980, The current account as percentage of GDP dropped to -6 percent in 2006 reaching over 850 billion deficit.
Foreign exchange gain (loss) = (1.21 -1.10)/(1.10)
(1+ return $) = (1+.08) (1+.10)
Return $ = .1880
After the implementation of Real Plan that pegged the Brazilian Real to US dollar at exchange rate of 1 to 1 in 1994, Brazil continued to have current account deficit as Brazilian goods for export became very expensive. Once Brazil abandoned the parity and Real devalued by 67 percent, current account as percentage of GDP turned positive in 2003.
Roll over risk refers also to the availability risk as major international banks refuse to extend credit to a borrower at a prevailing market interest rate on a maturing debt or demand and require good collateral and or substantial increase in interest rate.