With crashing Rupee, RBI’s new Chief Rajan to take charge today

Wednesday, 4 September 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The Reserve Bank of India said Raghuram Rajan, the former chief economist at the International Monetary Fund, will take charge as governor of the central bank on Wednesday, replacing Duvvuri Subbarao. Rajan, who has most recently been an adviser at India’s finance ministry, will step into the eye of the storm roiling the country’s economy and become the new chief defender of a nose-diving rupee. The rupee fell below 68 to the dollar in trade to near record lows on Tuesday after Standard & Poor’s said there was a more than one-in-three chance of a ratings downgrade for the country and as fears of war in the Middle East roiled global markets. Suspected RBI intervention below 68 per dollar levels helped the rupee recover marginally to close at 67.63/64 per dollar, still down 2.4 percent from Monday’s close of 66.00/01. The RBI’s rupee defence has so far rested largely on draining money markets, but it has still tumbled more than 20 percent against the dollar since early May, and higher short term interest rates have raised borrowing costs for struggling corporates, threatening to throw another wrench into the already-slowing economy.

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