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Under the pure flexible exchange rate regime, a current account surplus or deficit (assuming the capital account is negligible) must be matched by a financial
Under the pure flexible exchange rate regime, a current account surplus or deficit (assuming the capital account is negligible) must be matched by a financial account deficit or surplus, and vice versa. this is illustrated by the equation: BRA=BCABCA+BKA+BFA=BRABCA+BKA+BFA+BRA=0BCA+BKA=BFA
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