RBI to tolerate weaker rupee as inflows dry up: Report

The Reserve Bank of India (RBI) will tolerate a weaker rupee as the country's external sector confronts multiple headwinds including a wider trade gap and stalling of dollar inflows into the world's fifth-largest economy, three sources familiar with the central bank's thinking told Reuters.

RBI, which had supported the rupee through aggressive interventions via dollar sales until last month, has allowed the rupee to fall 1.3% in the last seven trading sessions to a record low of 90.42 per dollar.

The rupee, down 5.5% on year, is Asia's worst performing currency.

By signaling tolerance for a weaker rupee, the central bank is indicating that it will intervene mostly to curb sharp volatility or on any signs of a speculative build-up but not defend any specific level on the rupee, the sourc