Question

Decrease in foreign exchange reserve with Central Bank will be recorded in____( capital account credit side \ current account debit side) of BOP

Answer 1

Answer:

capital account credit side

Answer 2

Decrease in foreign exchange reserve with Central Bank will be recorded in credit side of Capital Account.

• The account accurately reflects proper BOP and maintains a continuous course of a year's total difference in the capital assets and dues of a independent nation.
• The foreign exchange reserves are typically kept as the government's financial assets by the Central Bank. In the BOP, a gradual shift in foreign exchange reserves acts as financing products.  
• Therefore, completed withdrawals from the adequate reserves are accurately reported on the credit side of the BOP capital account.