Relax, Rajan's exit from RBI won't weigh on businesses

Dubai - Leaving won't have any roller-coaster effect on Indian stock markets

Business will remain as usual after the departure of Raghuram Rajan as governor of the Reserve Bank of India as this will not impact the currency and stock markets in the country, according to industry specialists.
Last Monday was the first working day for markets after Rajan's announcement but Indian stock markets witnessed fantastic gains on the first day of the week. Only the Indian rupee lost 23 paisa compared to Friday's close.
On Tuesday, markets went down - the Sensex by 54 points and NSE Nifty by 19 points - but analysts said its about the Brexit impact, not the "Rexit" impact. The Sensex declined to 26,813 points compared to Friday's close of 26,626 points and the Nifty fell to 8,220 points on Tuesday compared to Friday's close of 8,170 points. The rupee closed 67.48 vs the dollar on Tuesday compared to Friday's close of 67.07.
"It's a loss of a respected bank chief but there will be no roller-coaster effect on currency and stock markets," UAE Exchange president Y. Sudhir Kumar Shetty told Khaleej Times. "I don't foresee any negative impact on the Indian economy, stock markets and currency market after his departure."
"It's also not surprising as most of the RBI governors retired after one term in the past," he said. "Now India has to look for a very admirable and efficient man for this post. I believe someone who is really competent will replace him," he added.
Responding a question about Rajan's three-year tenure, he replied: "The credit goes to Rajan for helping stabalise the currency, restoring foreign investors' confidence in Indian policymaking and lowering inflation and the current account deficit sharply."
Adeeb Ahamed, chief executive officer of Lulu International Exchange, said: "The impact of the news of Raghuram Rajan's exit from the RBI didn't have much impact on the Indian rupee. Although it opened with a gap-down of 56 paisa from Friday's closure, it recovered in the subsequent days."
He added: "In addition to this, as the Brexit fears eased, major currencies gained which might have helped the rupee to bounce back. Ultimately, there has been a slight drop in the Indian rupee in a knee-jerk reaction to the announcement of Rajan's exit."
"What needs to be now seen is whether the incoming governor would promote the same kind of monetary policies that Rajan pushed for, such as reforming the banking sector and including inflation-targeting as the main monetary policy objective," he said.
Shetty said Rajan's tenure has been excellent for the Indian economy. When he took charge the inflation rate was at uncontrollable level and the markets were not doing well, he said, adding that sentiments for foreign investors were also low.
- abdulbasit@khaleejtimes.com

• India