Kindly explain the underlined lines in Sandeep Garg Macroeconomics Page 12.8 under 'Official Reserve Transactions'???
Dear student,
Official reserve transactions refers to those transactions of the monetary authority that lead to a change in the official reserves. They are carried through sale or purchase of currency in the exchange market.
The purchase of country's own currency is a credit item in BOP as it leads to outflow of foreign exchange. On the other hand, sale of own currency is debited as it leads to inflow of foreign currency.
Official reserve transactions refers to those transactions of the monetary authority that lead to a change in the official reserves. They are carried through sale or purchase of currency in the exchange market.
The purchase of country's own currency is a credit item in BOP as it leads to outflow of foreign exchange. On the other hand, sale of own currency is debited as it leads to inflow of foreign currency.