The article investigates how low-income countries manage their external balance by analyzing factors affecting their real exchange rates, current accounts, and foreign assets. The researchers focus on specific features of these countries, such as policy distortions, external financing, and vulnerability to shocks. They use a unique database to study these indicators simultaneously, which is not common in existing literature. Previous studies have mainly looked at saving and investment decisions, but this research considers broader factors like financial crises and institutional variables.