India’s central bank appears to have stopped trying to rein in the rupee to help exports, letting the currency drift to a six-month high and raising expectations it will gain further, analysts and market participants said. Dollar-buying intervention by the Reserve Bank of India (RBI) in recent months has made the rupee one of the worst-performing Asian currencies in 2020, despite massive dollar inflows into stock markets and for corporate fundraising. The RBI has kept the rupee weak to help exporters and made large interest rate cuts to support the economy as the coronavirus pandemic curbs activity, but inflation risks are now putting it in a bind. The government’s decision to sharply increase market borrowing while the economy and public finances are under strain is driving up bond yields, which move inversely to prices. Dollar weakness, foreign direct investment and stock market inflows, meanwhile, have all added to the rupee’s strength.Traders and analysts say while the central bank can intervene to tamp down yields, it doesn’t have much scope to restrain the rupee without fuelling inflation at a later point.” I think it’s highly tactical. For now, yes, the RBI is happy to allow some appreciation as it’s running out of space to do unsterilised intervention,” said A. Prasanna, chief economist at ICICI Securities Primary Dealership.The RBI typically removes excess rupee supply in the banking system from its foreign exchange interventions by selling bonds. In recent months, however, the RBI has been unable to sell bonds on the open market, and has instead bought them to combat rising yields.