One way to understand this process intuitively is by thinking through two different markets. First consider the Foreign Exchange market. At equilibrium the quantity supplied = the quantity demanded. Thus, Imports + Capital outflow = Exports + Capital Inflow. Rearranging this equation we find that Imports – Exports = Capital Inflow – Capital Outflow. Because Imports – Exports = Trade Deficit and Capital Inflow – Capital Outflow = Net Capital Inflow, we get the equation Trade Deficit = Net Capital Inflow (or Current Account deficit = Capital Account Surplus).