Correct Answer: Option D

Explanation

A balance of payment surplus means that the country's exports of goods, services, and capital exceed its imports. This leads to an inflow of foreign currency into the country.
The surplus funds can be used to purchase foreign currencies and assets, thereby increasing the country's foreign reserve holdings. This can provide a cushion for the country in case of future economic uncertainties or can be used for strategic purposes such as stabilizing the exchange rate.

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