The tell tale stories of Raghuram Rajan’s second run as Governor of Reserve Bank of India did not come through as Rajan informed his wish to quit in September. Even just a news published in one part of the press that Rajan wants to leave the Central Bank at the end of his three-year term in early September, shaved 10 paise off benchmark government bond and 26 paise off the Indian currency in the recent past. Now he has given his mind to leave the Central Bank and that may shook the market in September totally. The the fake news had a direct impact on the market and the announcement from the horse’s mouth now may crash the market still further. The mud slinging by Dr. Subramaniam Swamy and the after effects all show that the dirty linen is washed in public. But one thing is sure that Rajan’s presence boosted the market and now he has decided to go and we have to wait and see the outcome when the new Governor takes control. No one is indispensable in the system and the changes are anticipated in advance and the markets may recover in time. Anyway all eyes are on currency and equity markets after the D-day.
(The views expressed by the author in the article are his/her own.)