Indian markets are set to open lower on Monday after Reserve Bank of India (RBI) governor Raghuram Rajan unexpectedly said he will step down in September, though the central bank is likely to step in to support the Rupee, analysts and traders said. 
 
Traders predicted the Rupee would likely fall by 0.15 to 0.20 Rupees per Dollar at the start of trading, but that the RBI would intervene to prevent excessive volatility. 
 
The Rupee closed at 67.0775/67.0875 per Dollar on Friday. 
 
The 10-year benchmark bond yield was seen rising 3-5 basis points after closing at 7.50 per cent on Friday, while shares were forecast to fall at the open. 
 
Any volatility could be magnified given the surprise news that Rajan would step down after just one three-year term comes ahead of a UK referendum on Thursday about whether to leave the European Union, which has kept global investors on tenterhooks. 
 
Still, analysts said markets would stabilise as investors await word on who will be appointed as the next RBI Governor, with RBI deputy governor Urjit Patel and State Bank of India chair-managing director Arundhati Bhattacharya seen as potential replacements. 
 
&quot;There should be a knee-jerk reaction on the Rupee,&quot; said Ashtosh Raina, head of foreign exchange with HDFC Bank. &quot;Then the market will normalise. I think the government would already be on the job to find a suitable replacement.&quot; 
 
Rajan, a former International Monetary Fund chief economist, has been popular with foreign investors for his efforts to tackle inflation and helping to rescue India from its worst crisis in more than two decades when he took the helm in 2013. 
 
But he has faced mounting criticism from a faction within Indian Prime Minister Narendra Modi&#39;s ruling party for keeping interest rates high and over a perception he had begun to stray into politics. 
 
A senior official at a foreign bank said clients were already starting to call him. 
 
&quot;There are concerns. We have started seeing messages from foreign clients whether politics has taken over central banking. They are asking what&#39;s happening in India,&quot; he said, declining to be identified discussing conversations with clients. 
 
Still, analysts said markets would likely withstand any initial volatility, and expressed confidence the government would come up with an appointment that could gain the confidence of investors. 
 
&quot;The timing is certainly bad,&quot; said Rupa Rege Nitsure, group chief economist with L&amp;T Finance Holdings in Mumbai. 
 
&quot;I have confidence in the credibility of the RBI as a public institution and I&#39;m sure whoever fills in his shoes will be able to shoulder the challenge with the help of RBI &#39;s internal talent and skills.&quot; 
(Reuters)

Reserve Bank of India governor Raghuram Rajan unexpectedly said he will step down in September

Indian markets are set to open lower on Monday after Reserve Bank of India (RBI) governor Raghuram Rajan unexpectedly said he will step down in September, though the central bank is likely to step in to support the Rupee, analysts and traders said. Traders predicted the Rupee would likely fall by 0.15 to 0.20 Rupees per Dollar at the start of trading, but that the RBI would intervene to prevent excessive volatility. The Rupee closed at 67.0775/67.0875 per Dollar on Friday. The 10-year benchmark bond yield was seen rising 3-5 basis points after closing at 7.50 per cent on Friday, while shares were forecast to fall at the open. Any volatility could be magnified given the surprise news that Rajan would step down after just one three-year term comes ahead of a UK referendum on Thursday about whether to leave the European Union, which has kept global investors on tenterhooks. Still, analysts said markets would stabilise as investors await word on who will be appointed as the next RBI Governor, with RBI deputy governor Urjit Patel and State Bank of India chair-managing director Arundhati Bhattacharya seen as potential replacements. "There should be a knee-jerk reaction on the Rupee," said Ashtosh Raina, head of foreign exchange with HDFC Bank. "Then the market will normalise. I think the government would already be on the job to find a suitable replacement." Rajan, a former International Monetary Fund chief economist, has been popular with foreign investors for his efforts to tackle inflation and helping to rescue India from its worst crisis in more than two decades when he took the helm in 2013. But he has faced mounting criticism from a faction within Indian Prime Minister Narendra Modi's ruling party for keeping interest rates high and over a perception he had begun to stray into politics. A senior official at a foreign bank said clients were already starting to call him. "There are concerns. We have started seeing messages from foreign clients whether politics has taken over central banking. They are asking what's happening in India," he said, declining to be identified discussing conversations with clients. Still, analysts said markets would likely withstand any initial volatility, and expressed confidence the government would come up with an appointment that could gain the confidence of investors. "The timing is certainly bad," said Rupa Rege Nitsure, group chief economist with L&T Finance Holdings in Mumbai. "I have confidence in the credibility of the RBI as a public institution and I'm sure whoever fills in his shoes will be able to shoulder the challenge with the help of RBI 's internal talent and skills." (Reuters)

Economist stepping down as Indian central bank governor set to hit markets

Reserve Bank of India (RBI), central bank of India, Governor Raghuram Rajan, who has faced criticism from members of the ruling party for keeping interest rates too high, stunned officials on Saturday by announcing he would step down when his term ends on September 4. 
 
Rajan, a former chief economist at the IMF, has been popular with foreign investors for his efforts to tackle inflation, and won praise for helping rescue India from its worst currency crisis in more than two decades after taking the helm in September 2013. 
 
But in a nearly 900-world letter to staff he said he planned to return to academia, even as he noted two of his actions - the creation of a monetary policy committee to set interest rates and the clean-up of the banking sector - remained unfinished. 
 
&quot;While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on Sept. 4, 2016,&quot; Rajan said in the letter released by the RBI. 
 
&quot;I will, of course, always be available to serve my country when needed.&quot; 
 
Rajan, who is on leave from the University of Chicago, was appointed RBI Governor by the previous Congress government, where he had served as chief economic advisor to the finance minister for about a year before taking the helm of the central bank. 
 
&quot;The Government appreciates the good work done by him and respects his decision. A decision on his successor would be announced shortly,&quot; Finance Minister Arun Jaitley said in a tweet on Saturday. 
 
Although feted by investors, Rajan had faced strident criticism from right-wing members of Prime Minister Narendra Modi&#39;s Bharatiya Janata Party, including parliament member Subramanian Swamy, who has waged a public campaign against his economic policies. 
 
Rajan had also veered into topics - such as intolerance in society - that have angered some BJP members, as did recent comments that were seen by some government officials as playing down their economic accomplishments. 
 
&quot;GOOD TEACHER&quot; 
 
Still, Rajan was known to have a good working relationship with Modi, with the Prime Minister calling the RBI governor a &quot;good teacher&quot; on economic matters, and government officials had previously told Reuters that Modi&#39;s administration would re-appoint the governor, should he wish to stay on. 
 
Many of Rajan&#39;s key accomplishments have come in close collaboration with the Modi government. 
 
Rajan pushed for inflation targeting to tackle India&#39;s history of volatile prices, which was then unveiled by the government last year. 
 
He has also worked with the government on the creation of a monetary policy committee as well as the clean-up of heavily indebted banks - both of which may now have to be tackled by his successor. 
 
Current RBI Deputy Governor Urjit Patel, State Bank of India chairman Arundhati Bhattacharya, the finance ministry&#39;s Chief Economic Adviser Arvind Subramanian and the government&#39;s Economic Affairs Secretary Shaktikanta Das have previously been named by analysts as potential replacements should Rajan depart. 
 
Analysts said markets would likely react negatively on Monday, at a time when global factors such as Britain&#39;s referendum on European Union membership are already weighing. Though many analysts had speculated Rajan could decide not to pursue a second term, few had foreseen it would come in the form of a letter to staff. 
 
Senior government and RBI officials contacted by Reuters said they had been taken by surprise at the announcement. 
 
&quot;This will be seen as a disappointment by the market particularly the international investors&#39; community,&quot; said Ananth Narayan, regional head of financial markets for ASEAN and South Asia at Standard Chartered Bank. 
 
&quot;And we can only hope the government quickly announces a strong replacement to fill his big shoes.&quot; 
(Reuters)

Investors loved him, Modi had a strong like but more right-wing members of India's ruling party were strident critics

Reserve Bank of India (RBI), central bank of India, Governor Raghuram Rajan, who has faced criticism from members of the ruling party for keeping interest rates too high, stunned officials on Saturday by announcing he would step down when his term ends on September 4. Rajan, a former chief economist at the IMF, has been popular with foreign investors for his efforts to tackle inflation, and won praise for helping rescue India from its worst currency crisis in more than two decades after taking the helm in September 2013. But in a nearly 900-world letter to staff he said he planned to return to academia, even as he noted two of his actions - the creation of a monetary policy committee to set interest rates and the clean-up of the banking sector - remained unfinished. "While I was open to seeing these developments through, on due reflection, and after consultation with the government, I want to share with you that I will be returning to academia when my term as Governor ends on Sept. 4, 2016," Rajan said in the letter released by the RBI. "I will, of course, always be available to serve my country when needed." Rajan, who is on leave from the University of Chicago, was appointed RBI Governor by the previous Congress government, where he had served as chief economic advisor to the finance minister for about a year before taking the helm of the central bank. "The Government appreciates the good work done by him and respects his decision. A decision on his successor would be announced shortly," Finance Minister Arun Jaitley said in a tweet on Saturday. Although feted by investors, Rajan had faced strident criticism from right-wing members of Prime Minister Narendra Modi's Bharatiya Janata Party, including parliament member Subramanian Swamy, who has waged a public campaign against his economic policies. Rajan had also veered into topics - such as intolerance in society - that have angered some BJP members, as did recent comments that were seen by some government officials as playing down their economic accomplishments. "GOOD TEACHER" Still, Rajan was known to have a good working relationship with Modi, with the Prime Minister calling the RBI governor a "good teacher" on economic matters, and government officials had previously told Reuters that Modi's administration would re-appoint the governor, should he wish to stay on. Many of Rajan's key accomplishments have come in close collaboration with the Modi government. Rajan pushed for inflation targeting to tackle India's history of volatile prices, which was then unveiled by the government last year. He has also worked with the government on the creation of a monetary policy committee as well as the clean-up of heavily indebted banks - both of which may now have to be tackled by his successor. Current RBI Deputy Governor Urjit Patel, State Bank of India chairman Arundhati Bhattacharya, the finance ministry's Chief Economic Adviser Arvind Subramanian and the government's Economic Affairs Secretary Shaktikanta Das have previously been named by analysts as potential replacements should Rajan depart. Analysts said markets would likely react negatively on Monday, at a time when global factors such as Britain's referendum on European Union membership are already weighing. Though many analysts had speculated Rajan could decide not to pursue a second term, few had foreseen it would come in the form of a letter to staff. Senior government and RBI officials contacted by Reuters said they had been taken by surprise at the announcement. "This will be seen as a disappointment by the market particularly the international investors' community," said Ananth Narayan, regional head of financial markets for ASEAN and South Asia at Standard Chartered Bank. "And we can only hope the government quickly announces a strong replacement to fill his big shoes." (Reuters)

Reserve Bank of India chief Raghuram Rajan to step down

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Economist stepping down as Indian central bank governor set to hit markets

Reserve Bank of India chief Raghuram Rajan to step down