Reserve Bank of India (RBI) Governor, Urjit Patel, resigned as India’s central bank chief. The shock resignation is having an adverse effect on the Indian rupee. The currency has fallen as much as 1.6% against the US dollar since the news broke.
How Patel’s resignation affects India’s central bank
Patel said in a statement that he was leaving the central bank for personal reasons. He thanked the RBI in his resignation letter.
‘On account of personal reasons, I have decided to step down from my current position effective immediately. It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years. The support and hard work of RBI staff, officers and management has been the proximate driver of the Bank’s considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future,' said Patel.
Financial experts believe that he left because the Indian government was trying to exert its influence over the RBI. Indian Prime Minister, Narendra Modi, has been critical of the bank in recent months. Many economists fear that Patel’s departure could signal the end of the RBI’s independence.
‘This is a clear signal of an eminent institution being attacked and its independence being chipped away one step at a time by the government,’ said independent economist, Ashutosh Datar.
Rahul Gandhi, a political rival of Modi, also lamented Patel’s resignation.
‘With the RBI governor's resignation one more independent institution has fallen,’ said politician and Modi rival, Rahul Gandhi, in a tweet.
What’s next for the rupee
The rupee has been one of the hardest hit Asian currencies in 2018 as foreign investors are leaving the country. An Indian election could also signal more uncertainty for the currency. It remains to be seen how Patel’s resignation will further impact the Asian nation’s economy.