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Please explain the underlined lines???
How is purchase of own currency a credit and sale a debit???
My teacher says that when we purchase our own currency , there is outflow of foreign currency which is a debit and inflow of our currency which is a credit.
But in case of BoP dont we look at the transactions from the point of view of foreign currency and not that of domestic currency???

Please explain the underlined lines??? How is purchase of own currency a credit and sale a debit??? My teacher says that when we purchase our own currency , there is outflow of foreign currency which is a debit and inflow of our currency which is a credit. But in case of BoP dont we look at the transactions from the point of view of foreign currency and not that of domestic currency??? (DISEQUILIBRIUM) IN BALANCE OF PAYMENTS the to be in during a A not much a problem. I Lowever, a deficit otten i. when total inflows on account of am less that. total on account of such transactions, the other a.voun ot evcved total ou tflows on account then therv in account. Transactrorts are the transactions by a central bank that cause changes Autocremous Receipts and Autonomous Payments. The disequilibrium between them may to in tho balanco 0t payments. •Causes in Booster Section F KEY POINTS • Balance ot Payments (BOP) provides a systematic record of all economic transacbons between the tes•deots and the rest ot the world. dunng a given penod ot time. • Economic transactions Items. (iO Invisible Items; (iii) UnilateralTransfors. Ov) Capo Transfers • Balance otTrade (BOT) is the ditiorenco between visible exports and visible imports. • Current Account records au the transactions relating to export and import ot goods, services ard transters during a given period 0t timo, Components of Current Account (i) Export and Import 0t Goods; (ii) Export and Import of Services: Umiatecal Tiansters to and trom abroad; (iv) Income receipts and payments to and from abroad Capital Account records all those transactions which cause a change in tho assets or liabilities ot the resdents 0t a country or its government. Cotnponents ot Capital Account: (i) Bonowings and londings to and from abroad; (å) Investments to and from atvoad; (in) Change in Foreign Exchange Reserves. • Autonomous Items those international economic transactions, which take place due to some economic motive such as profit maximisation. Accommodating items refer to the transactions that are undertaken to cover deficit or surplus in

Dear student, 
When there is inflow of foreign exchange it is recorded as a  credit item in BOP. On the other hand, when there is outflow of foreign exchange it is recorded as debit item in BOP. 
Official reserve transactions are those accommodating transactions carried out by the central bank that lead to change in the official reserves of the economy. In order to correct the disequilibrium in BOP sometimes the central bank carries out transactions in foreign exchange.Whenever there is rise in foreign exchange reserves it is recorded as a credit item in BOP. On the other hand, whenever there is fall in he exchange reserves it will be recorded as a debit item in the BOP.
Now, when there is purchase of own currency there would be a rise in the foreign exchange reserves. So, it will be recorded as a credit item. On the other hand, when there is sale of own currency in exchange there would be a fall in the foreign exchange reserves. So, it will be recorded as a debit item

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