Why withrawl from foreign exchange reserves recorded on credit side of capital account and vice versa
Dear student,
Foreign exchange reserves are held by the Central Bank as the financial assets of the government. A change in foreign exchange reserves act as financing items in the BOP.
Accordingly, withdrawal from the reserves are recorded on credit side (as positive item) in the capital account of BOP
Foreign exchange reserves are held by the Central Bank as the financial assets of the government. A change in foreign exchange reserves act as financing items in the BOP.
Accordingly, withdrawal from the reserves are recorded on credit side (as positive item) in the capital account of BOP