Vilasram Deshmukh is forecasting JPY/USD exchange rates based on balance of payments analysis. He notes...

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Finance

Vilasram Deshmukh is forecasting JPY/USD exchange rates based on balance of payments analysis. He notes that the United States is running large current account deficits relative to Japan. Based on this information, he concludes that the JPY/USD rate should decrease. His conclusion is most likely supported by which one of the following reasons.

Please provide explanation to justify your answer.

A. flow mechanism of the current account influences.

B. portfolio composition mechanism of the current account influences.

C. capital account influences.

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