Mumbai: The reappointment, or not, of Reserve Bank of India head Raghuram Rajan has caused enough of a stir to be known locally as “Rexit”, a play on Britain’s EU referendum, reflecting the esteem in which the governor is held at home and abroad.
Were Rajan to leave when his tenure ends in September, Indian markets are expected to fall to reflect his standing, but some foreign fund managers are of the view that, even if he does go, it would not be the end of the world.
Both reduce the discretion the Reserve Bank of India (RBI) governor has historically enjoyed in setting policy, making the institution more consensus-based and bringing it closer into line with other big central banks like the US Federal Reserve.
“The short answer is that investors, especially fixed income investors, will not be happy if he leaves, and it will surely trigger some sales,” said Kieran Curtis, investment director of emerging markets debt at Standard Life Investments in London.
