REXIT: Swamy laughs alright but whose loss is it any way ....
New Delhi: Though the Indian finance minister Arun Jaitley wasted no time in welcoming the decision taken by the Reserve Bank governor to quit from the second term, Raghuram Rajan’s exit is going to proved costly for the economy, the reactions suggest.
Rajan’s decision to move back to his field of research and training grew concerns among the industry about the possible negative impact on the stocks, bonds, and currency markets. The Sensex, witnessed volatile trading sessions,on Monday, after Rajan expressed his desire not to continue with his second term as the Reserve bank governor.
Rajan, on Saturday, had said that he would not be seeking a second term and plans to return to academia when his term ends on September 4.
Raghuram Rajan is the first RBI governor since 1992 who is not willing to seek a second term as India’s central bank boss.
Swamy happy with Rajan’s descision, not the market:
- Although, the BJP legislator Subramanium Swamy seems happy with the Rajan’s decision, the market weeps at his refusal to continue the second term of his service. The market regulator SEBI and stock exchanges beefed up their risk management and surveillance mechanism to address any eventuality.
- While BJP MP Subramanian Swamy, who ran a tirade against Rajan, took a jibe at the outgoing Governor, the International investors have declared it as not a good news for the Indian market. Noted economist Amartya Sen also vented the same sentiments terming it as a bad news.
- “Whatever ‘fig leaf’ he wants for hiding the reality, the people should not grudge it and wish him ‘good bye’,” Swamy had said after Rajan’s statement.
What foreign economy feels about the Rexit:
- Dr. Rajan, a former chief economist at the International Monetary Fund (IMF), has been popular with foreign investors who acknowledged his efforts to lower inflation and clean up massive bad loans by state-run banks.
- Geojit BNP Paribas’ Chief Investment Strategist V K Vijayakumar said Rajan’s decision is indeed “bad news” and comes at a wrong time when the global economy is concerned about the consequences of a possible exit of the UK from the European Union.
- “The currency market and the stock market will be impacted negatively when they open on Monday. We feel the initial knee jerk reaction of the market will be short lived because India’s macros are in a sweet spot,” he noted.
- SAMCO Securities CEO Jimeet Modi said Rajan’s decision not to seek a second term would create an emotional shock.
- He, however, have opined that the domestic economy and the RBI have the strength to overcome the initial negative impact.
- “We also believe the markets are mature enough to assimilate the fact and move on. It may create a knee jerk reaction in the short term,” he said.