The Reserve Bank of India (RBI) has sold $15.2 billion in foreign exchange in December 2024 to stabilize the rupee, according to the latest data released by the central bank. This comes after the US president-elect Donald Trump’s statements on tariffs led to a surge in the value of the US dollar, causing the rupee to weaken. In an effort to stabilize the currency, the RBI sold $69 billion in forex and purchased $53.9 billion in the spot market, resulting in a net outstanding forward sales of $67.9 billion. The rupee appreciated against a basket of 40 currencies, but its trade-weighted real effective exchange rate weakened to 104.82, indicating that the currency is still vulnerable.
According to RBI Governor Sanjay Malhotra, a 5% depreciation in the rupee results in a 30-35 basis point inflation in the domestic market. A weaker currency is beneficial for exports, but it negatively impacts imports. On the other hand, the rupee stood at 86.79 against the US dollar in early trade on Thursday, up 19 paise from the previous day.
In other news, state-owned Life Insurance Corporation (LIC) saw its total value of stocks dip by over Rs 84,000 crore in the past month and a half, with its holdings in listed companies valued at Rs 14.72 trillion in the December 2024 quarter, compared to Rs 13.87 trillion as of February 18, 2025. The current market volatility is expected to continue, with some analysts believing that there is little scope for early respite in LIC’s fortunes.