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The default behaviour (when no .opentofu-version or .terraform-version files are found, depending on which proxy command you use) of current version is latest-allowed which scan .tf and .tf.json files to extract required_version constraints.
Describe the solution you'd like
Please replicate this feature from tfswitch. https://tfswitch.warrensbox.com/Quick-Start/#use-versiontf-file
Additional context
It's backport of the original issue from tofuenv: tofuutils/tofuenv#31
cc @skyzyx
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