New Delhi: The Reserve Bank of India (RBI) has recorded net sales of $15.2 billion in December 2024 after its intervention in the foreign exchange market to stabilise the rupee, according to latest data released by the central bank on Wednesday.
This was $5 billion less than $20.2 billion in November, when US President-elect Donald Trump stoked fears of a tariff war, resulting in significant gains for the US dollar.
As per the RBI bulletin, it sold $69 billion of forex and purchased $53.9 billion in the spot market, while the net outstanding forward sales stood at $67.9 billion at the end of December, against net sales of $58.9 billion the previous month.
Over the past few months, RBI has been stepping in actively to sell dollars, to support the rupee, which has faced record lows due to uncertainties regarding the US trade tariffs, geopolitical uncertainties and portfolio outflows.
According to a report by The Times of India, RBI governor Sanjay Malhotra, who has reiterated the central bank’s policy on exchange rate management, had said that a 5% depreciation in the rupee resulted in a 30-35 basis point inflation in the domestic market.
While the intervention resulted in the rupee appreciating against a basket of 40 currencies, in January, the trade weighted real effective exchange rate, which measures the real competitiveness of the currency, was pegged at 104.82 as against 107.13, indicating weakening, the report stated.
A weaker currency is said to be good for exports, although it negatively impacts imports.
Notably, Rupee stood at 86.79 against the US dollar, up 19 paise, in early trade on Thursday.
Meanwhile, the correction in the equity market has weighed heavily on the state-owned Life Insurance Company (LIC), Business Standard reported, with its total value of stocks dipping more than Rs 84,000 crore in the past month and a half.
In the December 2024 quarter, LIC’s holdings in listed companies valued at Rs 14.72 trillion, whereas currently, as of February 18, 2025, these holdings value at Rs 13.87 trillion, translating to a 5.7% dip.
As per analysts cited in the report, there is little scope for early respite in LIC’s fortunes as the markets are expected to remain volatile amid intermittent bouts of recovery, which could get sold into.
