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Does anyone know why PayPal is refunding my account even though I have a balance in my account? For what reason could this be?
All I purchase is a refund to the store and I do not approve the purchase.
As you have not added your country to your community profile or said in your post then we can't help at the moment (Paypal varies a lot country to country).
You may need to verify your account with a back up card first before you can use your paypal balance.
HOWEVER if you are using your balance then it has to be in the correct currency as the person you are paying can accept.
Paypal will only convert automatically payments from bank account or cards.