What are official reserve transactions explain their importance in the balance of payments?
What are official reserve transactions explain their importance in the balance of payments?
Transactions that are carried out by the monetary authority of a country which makes changes in official reserves is known as official reserve transaction or ORT. Transactions such as the purchase and sale of currency in the exchange market for other assets and foreign currencies. By selling foreign currencies in the exchange market during the period of deficit and purchasing them during the surplus period. The increase and decrease in the official reserve are called as the balance of payments surplus and deficit respectively.
Importance of Official reserve transaction in the balance of payments are:
1. Helps in adjusting deficit or surplus in the balance of payments
2. Purchasing of own currency is regarded credit item in the balance of payments where selling is regarded as a debit.
Transactions that are carried out by the monetary authority of a country which makes changes in official reserves is known as official reserve transaction or ORT. Transactions such as the purchase and sale of currency in the exchange market for other assets and foreign currencies. By selling foreign currencies in the exchange market during the period of deficit and purchasing them during the surplus period. The increase and decrease in the official reserve are called as the balance of payments surplus and deficit respectively.
Importance of Official reserve transaction in the balance of payments are:
1. Helps in adjusting deficit or surplus in the balance of payments
2. Purchasing of own currency is regarded credit item in the balance of payments where selling is regarded as a debit.
