The capital account is one of the most important components of a country's balance of payments. It summarises a country's capital expenditure and income.

Capital expenditure and income are tracked through the flow of funds in the form of investments and loans into and out of an economy. This account includes foreign direct investments, portfolio investments, and other types of investments. It summarises the net flow of both private and public investment into a country's economy.

A capital account deficit indicates that more money is flowing out of the economy, along with an increase in the economy's ownership of foreign assets, whereas a surplus indicates the opposite. The balance of payments includes the current account (which summarises trade in goods and services) as well as the capital account, which records all capital transactions.

The capital account is a component of a country’s balance of payments (BoP) that records financial transactions related to assets and liabilities between residents and non-residents. It includes foreign direct investments (FDI), portfolio investments, debt forgiveness, and transfers of ownership in assets like land or patents.

A surplus in the capital account means a country is receiving more foreign investments, while a deficit indicates more capital outflows. The capital account works alongside the current account, which tracks trade in goods and services.

For forex traders, capital account movements influence currency values. Large inflows can strengthen a currency, while outflows may weaken it. Monitoring capital account trends helps traders anticipate economic shifts and potential market impacts.