Statement 1:
Buying G-secs injects liquidity, which increases money supply, worsening inflation.
To fight high inflation, RBI sells government securities to suck liquidity out.
Statement 2:
Selling dollars increases dollar supply → supports the rupee → slows depreciation.
Statement 3:
Lower interest rates abroad → capital inflows to emerging markets → rupee tends to appreciate.
To prevent excessive appreciation, RBI buys dollars to build reserves and maintain competitiveness.
