The Reserve Bank sells foreign exchange when there is a deficit. This move of RBI is known by which of the following?

1. Official reserve sale.
2. Balance of payments deficit.
3. Balance of payments surplus.
4. Balance of trade.

Option 1 -> When RBI sells foreign exchange, it's termed as official reserve sale.

Option 2 -> This is the situation/deficit condition, not the action taken by RBI.

Option 3 -> This represents excess foreign exchange, opposite of deficit situation.

Option 4 -> This is only the trade component (exports-imports), not RBI's action.

Hence, Official reserve sale -> When there is a balance of payments deficit (more foreign exchange going out than coming in), the Reserve Bank of India intervenes by selling foreign exchange from its official reserves to meet the shortfall and stabilize the exchange rate. This specific action of the central bank selling foreign currency reserves is technically called 'official reserve sale' or 'official reserve transactions'. It helps bridge the gap between demand and supply of foreign exchange in the market. -> correct