All eyes on currency, equity markets after RBI guv Rajan decides to go


File photo of Reserve Bank of India (RBI) governor Raghuram Rajan. Experts feel that Rajan’s decision not to seek a second term may dent investor confidence in Indian economy. (Reuters)

Investors in the bond and stock markets are keeping their fingers crossed with the rupee expected to bear the immediate brunt of Reserve Bank of India chief Raghuram Rajan’s exit, analysts said on Sunday.

The “rock star” central banker loved by foreign investors announced in a surprise move on Saturday that he won’t seek a second term after September.

Experts said Rajan’s decision may dent investor confidence in India’s economy and fuel concerns about a continuation of the RBI’s policy, especially in taming inflation and cleaning up massive bad debts held by state-run banks.

When markets open Monday, the rupee is expected to weaken by 30 paise against the dollar from its current position at 67.08, bond traders told HT on condition of anonymity because they are not authorised to speak to journalists.

Rajan’s return to academia came despite growing calls from industry leaders for a second term and apprehensions that his exit may hamper ongoing RBI reform work in bolstering the currency and reining in the current account deficit.

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