On Friday, India’s biggest stock market fell as the government imposed new curbs on trading and borrowing in response to a rout in the rupee.
The market is expected to return to positive growth soon.
The rupee has fallen more than 50% since June last year, and India’s economy is expected shrink by 3.5% this year.
The rupee’s strength against the dollar, and other major currencies, has been key to the country’s recent economic expansion, which has helped prop up growth.
A recent report from consultancy IBISWorld said India’s economic growth will slow to 1.9% this fiscal year from 3.1% in 2018, the weakest growth since 2008.
The slowdown in growth will also weigh on India’s foreign exchange reserves, which are expected to fall by $6 billion this year from a year earlier, the report said.
Inflation in India is expected at 1.8%, below the target of 3.3% set by the central bank.
But the central government has pushed up interest rates, and some economists believe this may be the trigger for a longer-term slowdown in inflation.
While India has long struggled with inflation, it has seen a rapid rise in food and fuel prices over the past few years, in response the country began to ramp up its industrial and export sectors.
India’s economic slowdown has also hurt the rupees exchange rate.
On Friday the ruo strengthened against the U.S. dollar, but the currency fell against a basket of major currencies.
On Friday, the ruab, a benchmark currency, was trading at 5.33 to the dollar.
In the past week, the rate has dropped to the lowest level in more than a decade.