India imposed restrictions on foreign exchange outflows on Wednesday in its latest attempt to prop up the rupee, as a spike in inflation heaped more pressure on policymakers to curb a crippling external deficit.
Finance minister P Chidambaram also reiterated his pledged to narrow the current account deficit — the main source of the rupee's weakness — to 3.8 per cent of gross domestic product this fiscal year and said the currency would not be allowed to slide into "free fall".
The Reserve Bank of India's latest steps to support the currency, which has plumbed record lows against the dollar, included cutting the amount of overseas direct investments allowed by Indians, as well as lowering the limits on remittances overseas and banning the use of such remittances for overseas property purchases.
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