Sir you never use reserve in market base currency that is whole purpose of it.thats very wrong on a lot of places. True forex is determined by the supply/demand but you use your reserve to buy back your currency in the international market to restrict and lower the supply of your currency to prevent it from devaluing. That’s the whole point of the reserve to restrict the supply of your currency if the demand falls
Interest more or less allows how much liquidity you want in your economy. 0 or negative interest means more borrowing from bank. Which means more currency is in circulation. And that borrowing can cause imports to increase should the borrow money is used to import machinery, luxury items etc etc
0 interest usually means government want more spending in the economy and want more consumption
The sole reason to increase the reserve in Market base currency is to attract FDI, better import position, and better you get better credit line.
You are only allowed to buy Dollar from the market cannot sell it under market base currency unless their is serious crisis like we had in March 2020.