Udayavni Special

Urjit Patel’s resignation comes at a sensitive time, to dampen sentiments: DBS


Team Udayavani, Dec 11, 2018, 12:47 PM IST

Singapore: The immediate resignation of Reserve Bank of India Governor Urjit Patel comes at a sensitive time, when negotiations with the government to iron out differences on key regulatory aspects are ongoing, the Singapore banking group, DBS, said on Tuesday.

“Timing of the Governor’s resignation and the already-cautious mood in the markets following yesterday’s exit polls, to be followed by today’s actual count for the state elections, will dampen sentiments,” Radhika Rao, economist at DBS Bank said.

The bank further noted that the uncertainty surrounding the Governor’s departure is likely to push 10-year INR yields back above 7.6 per cent in a knee-jerk sell-off, while, the Indian rupee is likely to weaken past 72 per USD.

Beyond sentiments, markets will seek clarity on Governor Patel’s successor, with the likelihood that one of the current Deputy Governors might take over the mantle.

A search panel might be formed, with a former Finance Secretary and Finance Commission member, also reportedly in the running. On policy, the RBI might soften its stance to adopt a more neutral-to-dovish approach as inflation continues to undershoot the 4 per cent target and growth rolls off its peak.

“Markets are likely to price in a shift to neutral stance as early as the February 2019 meeting, which the narrative increasingly swinging towards cuts if inflation stays below 4 per cent and global oil shows little signs of revival,” said DBS.

The Bank further pointed out that Deputy Governor Acharya had suggested on December 5, that more Open Market Operations (OMOs) are likely in the March 2019 quarter. Another INR 800 – 1 trillion tranche in January-March 2019, could take this year’s cumulative OMOs to INR2.5 to 3 trillion, it said.

Shades of dovish underpinnings in the RBI guidance is likely to drive 2-year bond yields yet lower towards 7 per cent, believes DBS.

Meanwhile, Singapore-based financial analysts said the sudden resignation of a financial stalwart such as Patel affects investors’ confidence in the country.

“This is shocking. Why he has to resign this week, ahead of the RBI meeting,” said a financial market analyst focused on India. Financially, India remain a stable economy with bright outlook. But politically, there is a deep concern about prospects as a large-scale development is underway in the country which seeks global investments, said the financial market observers.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Mysuru: Rs 28L raised to rebuild Isaaq’s library to be refunded

Rs 5 lakh aid each for kin of Nashik oxygen leak incident victims

Kukke Subramanya temple closed for devotees indefinitely

Karnataka CM directs ministers to take measures to contain COVID-19 in districts

Govt’s COVID-19 vaccine strategy ‘abject failure’; can’t blame Nehru when Modi in charge: Priyanka

DK DC announces new rules for marriages during wknd curfew; less than 50 guests, passes necessary

22 patients die due to interrupted supply of O2 at Nashik hospital




Related Articles More

Tata Group to import 24 cryogenic containers to transport liquid oxygen amid spike in COVID cases

Localised lockdowns already hitting economic activities: Report

Need complete trust between industry, govt to sustain growth amid Covid situation: Sitharaman

Rupee rises 23 paise to 74.64 against US dollar in early trade

L&T completes 75 years of construction, mining machinery business

MUST WATCH

Udayavani 21-April-2021 News Bulletin

Jayalaxmi Silks Udyavara | Kanchipuram Sarees​ | Glorious Bridal Sarees Unboxing

Ram Navami Special | Exclusive Interview with Vishwa Prasanna Theertha Swamiji | Udayavani

A model police station with all Covid-19 precautions set up in Mangaluru

Udayavani 20-April-2021 News Bulletin

Latest Additions

Mysuru: Rs 28L raised to rebuild Isaaq’s library to be refunded

Rs 5 lakh aid each for kin of Nashik oxygen leak incident victims

Darshan’s film ”Roberrt” to have digital premiere on Amazon Prime Video on April 25

Kukke Subramanya temple closed for devotees indefinitely

Karnataka CM directs ministers to take measures to contain COVID-19 in districts

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.