I need a way to explain current account deficits and its relation to the devaluation of the dollar?

Please help. I know what it is and how it works, but I am not talented enough to put it into words.
I need a way to explain current account deficits and its relation to the devaluation of the dollar?
A current account DEFICIT means that the US imports more goods and services than it exports. Now US entities generally pay US dollars for those imports, so that means foreign companies are receiving US dollars in trade -- in other words, the US is spitting out a bunch of dollars to the outside world. This increases the SUPPLY of US dollars in the hands of foreigners outside of the US.





Now the value of the US dollar on the currency exchanges is always based on supply and demand for the dollar. Price is set by supply and demand, and that applies here also.





Put those two facts together, and what you have is the supply of US dollars among foreigners (resulting from US buying imports) has been rising faster than their demand for dollars, causing the price of the dollar to fall as they trade in their dollars for their own currency or some other country's currency. It's that simple.





Keep in mind it's not just supply -- it's also demand. Lots of things affect the level of demand at any time. Foreigners would need dollars to buy US exports, or buy US stocks or bonds or other assets -- that's where much of the demand comes from. So lately, demand has been relatively lowered for several reasons: lower interest rates in the US make some US bonds less competitive; people afraid of the housing problems and credit crunch may sell their US stocks or avoid US investments, etc.





The current account deficit getting a little too big only contributes to the "supply" side of supply %26amp; demand, but as such is half responsible for the dollar weakness.
Reply:The current acount deficit means the U.S. buys more goods from abroad than they buy from us. This requires U.S. firms to acquire foreign currencies to purchase those goods. The U.S. supplies dollars to the world and demands other currencies. When supply increases relative to demand the price (in this case, exchange rate) will fall.
Reply:Because the value of the dollar is depreciating, it takes more dollars to pay off foreign debt.