According to reports, sources said the Bank of India will tolerate the weakening of the rupee as India's external sector faces multiple resistance, including widening trade deficits and stagnating dollar flows into the world's fifth-largest economy. The Bank of India supported the rupee by actively selling dollars until last month, but the last seven trading days have allowed the rupee to fall 1.3% to a record low of 90.42. The rupee has fallen 5.5% this year, making it the worst performing currency in Asia. By implying tolerating the weakening of the rupee, the Bank of India indicated that its intervention would mainly be used to contain sharp fluctuations or any signs of speculative accumulation, without defending any specific level of the rupee, the sources said. One of the sources commented, “There is no point in consuming foreign exchange reserves when everything about fundamentals is bad for the currency.” India is one of the markets with the worst capital outflows, and foreign investors have sold $17 billion worth of shares so far this year. At the same time, foreign direct investment, trade, and offshore finance flows have also slowed.

According to reports, sources said the Bank of India will tolerate the weakening of the rupee as India's external sector faces multiple resistance, including widening trade deficits and stagnating dollar flows into the world's fifth-largest economy. The Bank of India supported the rupee by actively selling dollars until last month, but the last seven trading days have allowed the rupee to fall 1.3% to a record low of 90.42. The rupee has fallen 5.5% this year, making it the worst performing currency in Asia. By implying tolerating the weakening of the rupee, the Bank of India indicated that its intervention would mainly be used to contain sharp fluctuations or any signs of speculative accumulation, without defending any specific level of the rupee, the sources said. One of the sources commented, “There is no point in consuming foreign exchange reserves when everything about fundamentals is bad for the currency.” India is one of the markets with the worst capital outflows, and foreign investors have sold $17 billion worth of shares so far this year. At the same time, foreign direct investment, trade, and offshore finance flows have also slowed.