Explanation

To defend a depreciating domestic currency, authorities focus on curbing dollar outflows, attracting foreign exchange inflows, and supporting the exchange rate:

– Measures taken to support the Rupee: Curbing imports reduces foreign currency demand (Option A); Masala bonds shift exchange rate risk to offshore buyers (Option B); easing ECB rules encourages foreign capital inflows (Option C).
– Option D (The measure NOT taken): Following an expansionary monetary policy increases the domestic money supply and lowers interest rates. Lower rates prompt foreign institutional investors to withdraw capital seeking higher returns abroad, worsening capital flight and accelerating the currency’s depreciation.

Therefore, following an expansionary policy is not the measure taken — Option D.