The fall in the equity market has had a serious impact on many insurance companies, including Life Insurance Company (LIC). The total value of LIC shares has declined by more than Rs 84,000 crore in the last one and a half months. Investors are becoming increasingly concerned, and uncertainty prevails in the market. Experts believe that concrete steps will be needed to strengthen the insurance sector in the near future.
RBI intervention: $15.2 billion sold to stabilize rupee, but uncertainty remains
New Delhi: The Reserve Bank of India (RBI), intervening in the foreign exchange market to stabilize the rupee, recorded a net sale of $15.2 billion in December 2024. This is $5 billion less than the $20.2 billion recorded in November, according to the latest data released by the central bank on Wednesday.
At that time, newly elected US President Donald Trump had raised fears of a tariff war, which led to a rise in the US dollar. Market experts believe that this move by the RBI may help reduce the volatility of the rupee, but investors need to be cautious amid global economic uncertainty.
RBI’s monetary policy: Big intervention in foreign exchange market to stabilize rupee
New Delhi: According to the RBI bulletin, the Reserve Bank of India (RBI) sold $69 billion of foreign currency and bought $53.9 billion in the spot market. Net outstanding forward sales stood at $67.9 billion at the end of December, higher than $58.9 billion in the previous month.
In the last few months, the RBI has been active in selling dollars to strengthen the rupee, as the rupee had fallen to record lows due to concerns over US trade tariffs, geopolitical uncertainties, and portfolio outflows.
Market analysts believe that this intervention by the RBI can help stabilize the currency market. However, investors will need to be cautious in view of the global economic conditions, as volatility may persist in the coming months as well.
RBI’s exchange rate policy: Rupee depreciation led to inflation, but efforts to stabilize continue
New Delhi: According to a report in the Times of India, RBI Governor Sanjay Malhotra reiterated the central bank’s policy on exchange rate management, saying that a 5% depreciation in the rupee has led to inflation of 30-35 basis points in the domestic market.
Although the rupee strengthened against a basket of 40 currencies after the RBI’s intervention, the trade-weighted real effective exchange rate (REER), which measures the real competitiveness of a currency, fell from 107.13 to 104.82 in January, indicating weakness in the rupee.
Market experts believe that the RBI’s proactive stance may help stabilize the rupee, but challenges will remain ahead due to global financial instability. The strength of the dollar in emerging markets may increase pressure on the rupee, which may require more intervention by the RBI.
Rupee fluctuations: Boost to exports, but setback to imports and LIC
New Delhi: Generally, a weak currency is considered beneficial for exports, but it has a negative impact on imports, which puts additional pressure on the economy.
The rupee strengthened by 19 paise to 86.79 against the US dollar in early trade on Thursday, bringing a slight positivity in the market. However, investors remain concerned due to the volatility of the rupee.
Meanwhile, the continuous decline in the stock market has also affected the government-owned Life Insurance Company (LIC). According to a report by Business Standard, the total value of LIC shares has declined by more than Rs 84,000 crore in the last one and a half months.
Economic experts believe that if the weakness in the rupee continues, it may affect investment and capital flow. At the same time, there is a possibility of further fluctuations in the market due to the caution of foreign investors.
Big blow to LIC: Shares fall 5.7%, little chance of improvement in near future
New Delhi: In the December 2024 quarter, Life Insurance Corporation of India’s (LIC) stake in listed companies was Rs 14.72 trillion. However, as of February 18, 2025, the value of these holdings fell to Rs 13.87 trillion, registering a massive decline of 5.7%.
Analysts quoted in a Business Standard report say that there is little chance of relief for LIC soon, as investors remain cautious due to the ongoing volatility in the markets. Despite the intermittent improvements, the selling pressure is expected to continue.
In addition, global economic uncertainty, a possible hike in interest rates, and the caution of foreign investors may further put pressure on the market. Investors are advised to remain cautious about the direction of the market in the short term, as volatility is likely to continue.
