Official reserves are the accommodating items in the BOP account. The transactions carried by monetary authority of a country, which cause changes in official reserves, are termed as official reserve transactions (ORT). These transactions are carried through purchase or sale of currency in the exchange market for foreign currencies or other assets. The reserves are drawn by selling foreign currencies in exchange market during deficits and foreign currencies are purchased during surplus to maintain an overall balance in the BOP.For example, If the overall balance of BOP is in surplus of 300 crores, then the government will purchase the foreign currencies from its official reserves worth 300 crores to maintain the overall balance in the BOP.Importance of ORT in balance of payments:1. Purchase of a country’s own currency is a credit item in the balance of payments; whereas, sale of the currency is a debit item.2. It helps to adjust the deficit and surplus in balance of paymentsHope this helps...