BY SUDEEP JAIN

MUMBAI (Dow Jones)–India’s central bank on Thursday gave local exporters 15 days to convert half their onshore foreign-exchange holdings into rupees, a drastic move aimed at stopping a slide in the currency that is exacerbating inflation, the trade deficit and other trouble spots in the nation’s economy.

The measure helped the rupee gain 1.6% against the U.S. dollar at one point Thursday in anticipation of the estimated billions of dollars that Indian exporters will have to convert into rupees later this month. The order doesn’t affect foreign companies based in India.

But the rupee gave up most of its gains …

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