Option 1 -> The reserve bank sells foreign exchange reserves to cover balance of payments deficits.
Option 2 -> IMF provides loans but doesn't conduct official reserve sales for individual countries.
Option 3 -> This describes accommodating transactions, not official reserve sales specifically.
Option 4 -> This describes currency exchange agreements, not reserve sales.
Hence, Option 1: The reserve bank sells foreign exchange when there is a deficit -> Official reserve sale is an accommodating transaction where the central bank/reserve bank of a country sells its foreign exchange reserves to finance balance of payments deficits or to maintain exchange rate stability. When autonomous transactions (trade, investment) create a deficit, the reserve bank intervenes by selling foreign currency reserves to bridge the gap. -> correct