Capital account

Capital account is a part of the balance of payments, together with current account. Capital account means the net change in the national ownership of assets.

It can be calculated as: FDI: Foreign direct investment+Portfolio investment+Other investment+Reserve account.

Portfolio investment is the purchase of shares and bonds (short term investments). Other investment includes loans. Reserve account is operated by the central bank, and it is important to note here that when capital flows in a country, and there is a current account surplus, the currency can appreciate - or vice versa.