For months, investors touted Indian equities as a place to hide if the global artificial-intelligence trade unraveled. This week, that thesis has played out.

India’s central bank carried out currency swaps worth at least $10 billion in recent weeks to reduce liquidity in the financial system, according to people familiar with the developments, as the authority seeks to curb inflation risks from surplus cash.

India’s central bank used currency swaps to drain cash from banks, according to people familiar with the matter, as excess funds in the financial system climbed to a record.

India’s central bank, whose programs are drawing in billions of dollars of overseas cash, is increasingly present in foreign-exchange markets to tamp down rupee volatility, offering a more predictable trajectory for the Asian currency.

Citigroup Inc. says its Indian corporate clients are expecting the rupee will keep weakening and are looking for products that will enable them to profit from its volatility.